Creating a clear financial picture should be a top priority if you want to pay off your mortgage faster. Budgeting can be your most valuable tool on this journey.

The first step towards budgeting correctly, is understanding your full financial landscape. What is your total financial inflow and outflow? You need to understand where your money is coming from, and where it is being spent. Having a clear understanding of how your money is being spent will help you to better save on unnecessary expenses, making room for bigger payments – such as your mortgage.

Step one: Track - List your income, expenses, and spending.

Many people don’t actually know exactly how much they’re spending outside of covering obvious monthly payments. This is why it’s so important to track your monthly spending. When you prepare your budget you have a clear picture of ALL of your expenditures (including small, seemingly harmless ones).

Step Two: Save - It is time to determine your savings goals.

What are you short, medium and long term savings goals? Write them down. Once you’ve set your goals, you can figure out how to achieve them in the framework of your income and expenses. You may need to rethink some of your spending habits for these goals to even be financially viable.

Step Three: Plan

The mere act of creating a monthly budget often opens up opportunities for increased savings, since personal spending ends up being better accounted for. Make sure that you prioritize creating an emergency fund in your budget, covering 3 to 6 months of expenses. In the event of unforeseen circumstances, an emergency fund works as a cushion of protection.

A well-constructed budget allows you to clearly understand how your finances are being managed. Armed with this knowledge you can pay down your mortgage much faster

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