After filing bankruptcy, you may feel overwhelmed or unsure about your financial future. But, remember that bankruptcy exists to give people a fresh start. With a well-planned post-bankruptcy budget, you can take control of your spending and build a stronger financial foundation for your future.
Creating Your Basic Budget
A better financial future starts with a budget that tracks every dollar you spend. Let’s look at how to build a budget that puts you back in control of your money.
List Your Monthly Income
Start with the money you bring home each month. Add up everything – your regular paycheck, any side work, and government benefits. Use the amount remaining after taxes. This tells you how much money you have to work with each month.
Track Essential Expenses
Your expenses fall into three main groups:
- Fixed costs – Bills that stay the same each month, like rent or car payments
- Variable costs – Expenses that change monthly, like groceries and utilities
- Irregular expenses – Things you pay occasionally, like medical bills or car repairs
You may first find it helpful to examine old bank statements to see where your money really goes. Then, after racking everything you spend for a month or two, it shows you where you can cut back.
Plan for Savings
Think of savings like any other bill you have to pay each month. Try to save at least 10% of what you make, even if you need to start with less and work your way up. Your first goal should be saving enough to cover 3-6 months of basic expenses. As you get better at managing your money, you can put more into savings and work toward bigger goals.
You should review your budget often and adjust it when things change. A budget that changes with your needs helps you stay on track in the long run.
Smart Money Habits to Build
Developing new spending habits can help you maintain your post-bankruptcy budget.
Using Cash for Purchases
Using cash can help you spend less and stick to your budget. Consider trying the envelope method: at the start of each month, place cash into separate envelopes labeled for expenses like groceries, gas, and entertainment. When you empty an envelope for a specific category, refrain from spending in that category for the rest of the month. Using cash instead of cards also helps you avoid the lure of high-interest loans and credit cards.
Shopping With a List
A well-prepared shopping list saves you both money and time. Before you go shopping:
- Inventory what you already have to avoid buying extras.
- Look for seasonal foods that are less expensive.
- Group similar items together to shop more efficiently.
- Write exactly how much of each item you need.
Also, try store brands—they often perform just as well as name brands but cost less. Sign up for store discount cards, too; the savings add up over time.
Avoiding Impulse Buys
Small, unplanned purchases can quickly eat away at your budget. Here’s how to avoid them:
- Wait 24 hours before buying something you really need.
- Don’t grocery shop on an empty stomach.
- Use pickup services to stay out of stores.
- Unfollow social media accounts that make you want to shop.
Try splitting your expenses into “must-haves” and “nice-to-haves”. This helps you focus your money on what really matters. Watch out for those little purchases – even small amounts can add up to hundreds of dollars before you know it.
Life after bankruptcy doesn’t have to be difficult. With good budgeting and careful money management, you can build a stronger financial future.
Ready for Your Fresh Start
Financial problems can happen to anyone. According to recent studies, nearly 63% of Americans live paycheck to paycheck.
If you’re struggling with overwhelming debt, Brock & Stout’s bankruptcy attorneys have over 25 years of experience helping clients get a fresh start. Contact us for a free evaluation of your financial situation to see if bankruptcy might be right for you.