Creating a Budget

Creating and maintaining a budget is crucial to the well-being of your finances. 

After reading up on personal finance and deciding that I was going to get serious and become responsible with my finances, the first thing I did after getting my job was to create a budget. I knew how much money I had available, and I knew what expenses I was going to have. I also knew that I needed to start an emergency fund. With these things in mind, I created a budget that I would be able to stick with and that had me feeling optimistic about my finances for the first time.

For the first time, instead of buying something when I felt like it, I consulted my partner in personal finance crime (corny, yes): my budget. Everything was laid out for me, so I as long as I didn't go over the amounts I had budgeted, I couldn't mess it up. It really made handling my money much simpler. And aside from knowing how much money I had for each category, I knew where every dollar went, because I recorded each transaction. By doing this, I was really able to determine my spending habits and further cut down on unnecessary expenses. 

In creating my budget, I tried to funnel as much money as I could toward my debt, which included credit cards with 12.99% and 15.99% interest, among many student loans. I budgeted what I needed, and no more, into the other categories, and then put the remaining money toward all of my debt. At this point I didn't have an emergency fund. I couldn't stand to think that I would be accruing very significant interest while I saved $1,000 in an account that yielded 1% interest. I was lucky that I didn't have any immediate emergencies. Would I recommend this for others? No, probably not. It just happened to work out for me.

My budget really got me on track to being disciplined with my finances. It was a starting point that opened my eyes to what being financially responsible meant. I finally felt like I had control. I was moving in a very positive direction. And I was lucky to figure this out at a relatively young age. I wish that I had done some things different related to money in my college years, but starting a budget and tracking expenses has gotten me on a track that I am very happy with. I am well on my way toward financial freedom.