Even the best laid plans are not perfect, and probably never will be, but if they’re enough to keep manage your debt, expenses while also setting aside money for retirement and/or investments – it’s good enough.
You can use all the information that you gathered while evaluating your income, debt and expenses to put together a budget. This budget should indicate your total monthly income and your total monthly expenses which include your bills, debts and purchases.
Generally paying off high interest debt like that incurred by credit card and store card debt must be prioritized above savings and investments since it’s unlikely that you will gain a return that exceeds the interest you pay for the same amount of debt.
If you have sufficient income to cover all of your expenses, any surplus income should be allocated to one or a combination of the following: debt overpayments, investments, retirement or general/emergency savings.
Once you have a sound budget set up you must do everything possible to stick to it and possibly even do better than anticipated by spending less and saving or investing more. If you happen to run into some additional income or receive an increase or promotion at work – use it to pay down debts or invest rather than go on a shopping spree.
In addition, you should evaluate and update your budget at least one every 3 months to ensure that all items are a true and accurate reflection of your monthly income and expenses.