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How do I budget my money after bankruptcy?

On Behalf of | Aug 11, 2022 | Bankruptcy

If you have already made the big decision of filing for bankruptcy, you may be wondering how to prevent yourself from getting into a sticky situation again.

Budgeting is a helpful tool that you should use to keep your finances on track to avoid bankruptcy in the future.

Figure out where your money is going

It is almost impossible to effectively make a budget for yourself if you are not sure where your money is going. Review your bank and credit card statements and make a categorized list of your monthly expenses. Group them into categories like housing, utilities, phone and internet services, groceries, household or personal care products, gas, entertainment and the like. You should also add a category for nonessential purchases that you have made and work toward eliminating unnecessary spending. Try out a free budget calculator to figure out what you should plan to spend moving forward.

Stick to the envelope system

One of the simplest, yet most effective, means of budgeting is the envelope system. With this system, each time you get paid, you place a specific amount of money in individual envelopes labeled with the categories in your budget. When it is time to make a purchase, you know exactly how much money is in the budget without having to check a budget list. If it is in the envelope, it is fair game for spending. This method is only as effective as your decision to make it work, so you should be careful to not spend more money than you have set aside in each category. Accordion coupon files are a more durable option than paper envelopes and work well for this simple budget method.

Completing and sticking with a budget after bankruptcy can help you protect yourself from future financial struggles.