Having a budget and living within it are all too often two
different things. There are always things that we want (or need) and credit is
so easy to get. This article will discuss ways to help you establish good
budgeting habits and stay with them.
First of all, why do you want to stay within your budget? You need a pretty good reason or you won’t
feel obligated to do what it takes. Decide that you want to get out of (if applicable)
and stay out of credit card debt. Decide that you would rather pay yourself
than somebody else (especially the credit card company). Decide to save for a
big vacation. Whatever it is, you need
a reason so that when that you won’t be enticed to overspend. Write your reason
down on both your budget and where you track your money.
Secondly, are you tracking your expenses often enough? If you
aren’t looking at your money every few days, you really have no idea how much
money you have and where it is going. If
possible, spend a few minutes a day updating your records instead of saving it
all for the end of the month or the middle of the next month!
Thirdly, why and where are you overspending? Look at your expenses
and see where you’ve crossed the line. Did you have a large, perhaps unexpected
medical, house, or automotive expense? This does happen infrequently.
Establishing a short-term savings can help offset these expenses when they occur.
If your overspending is due to discretionary expenses like
eating out, ATM fees, or other fines and fees (such as late returns on books,
videos, or DVDs), you might need to change some habits. What may seem like
little expenses at the time all add up.
Begin thinking of things in terms of what it costs you
over a long period of time, such as a year. For example, if you pay $3/week to
withdraw money from your ATM, that’s over $150/year. Instead limit withdrawals
to twice a month (or less) and that’s over $75/year in your pocket!
Below are some other ways to reduce both mandatory and discretionary
expenses:
·
Increase your car
insurance deductible to $500.
·
Check around for better
car insurance rates.
·
Conserve utilities when
possible.
Consolidate your credit card and other consumer debt into a
home equity loan and then cancel the cards, cut them up, and don’t apply for
new ones.
·
If you are renting, try to buy a house; tax advantages for
paying home loan interest often make it cheaper to own than to rent.
·
Eat out less; brown-bag your lunch; find less expensive
places to eat.
·
Find cheaper entertainment (like renting a movie
instead of going out to one).
·
Consolidate errands to use less gas.
·
Limit grocery shopping to one day a week; shop at more than
one store for groceries, if time permits.
·
Shop around for a better long-distance calling plan or cell
phone plan (assuming you have met the terms of your agreement).
·
Borrow books from the library instead of buying them; borrow
books on budgeting and finance.
Some people find it necessary to go to a cash-based system
(or even permanently). This is sometimes called the “envelope method.” It involves cashing your paycheck and depositing only what is needed to write checks for bills or to cover bills that are automatically withdrawn from your checking or savings accounts.
The remaining cash is allocated into envelopes marked for certain
expenses such as food, gas, etc. Once the money in any envelope is gone, if you
wish to make any additional purchases you either have to shift money from
another envelope or wait until you get paid. This really helps to develop
discipline.
Another thing to remember is that even if something you
want or need is “on sale,” you will usually pay more for interest on it than
you save by buying on sale if you have to put it on a credit card. If you think
you really do need an item, use the 7-day rule: Wait 7 days before purchasing
something other than what you’ve budgeted for. You will often find that the “need”
passes before the 7 days are up.
You may eventually find that there are no more places to
cut and you need to increase your income. This doesn’t necessarily mean getting
a second job, although that is a possibility. Below are some other ways to
increase your spendable money:
First, take a look at your tax return. If you’re getting anything
but a small return, you’re letting the government earn interest for itself with
your money. You probably wouldn’t let anyone else do that! Consider raising
your exemptions. You can acquire a new W-4 form to fill out from your Human
Resource department or manager.
Second, save or invest wisely to obtain dividends. This is
money that you don’t have to work for! This is an example of money working for
you.
Third, acquire new skills that can help you get a
promotion, or even a new job. Get your GED or college diploma, if you don’t
have one. There is a lot of financial aid available, and you may even be able
to attend college for free. A small investment of a few months or years could
yield big dividends for many years.
Fourth, consider starting a home-based business. There are
a host of tax deductions for home businesses, not to mention the extra income
that may stem from just a few hours a week.
Although a home-based business is not for everyone, you may enjoy it
enough to turn it into your next career!
Living within your budget is entirely possible, but you
must have a good enough reason to motivate yourself. Track your expenses often.
Evaluate what is working and what isn’t. Cut expenses where you can, increase
your income if you need to. Decide to make
changes and do them today. There is great freedom in knowing that you control
your money, not the other way around.
© Simple Joe, Inc.
Chemain Evans is a quality control specialist for Simple
Joe, Inc., makers of the popular Simple Joe’s Expense Tracker PC software. Expense Tracker is a quick and simple way to keep track of your expenses and stay within your budget. Expense Tracker (http://www.simplejoe.com/expensetracker/index2.htm) is ideal for tracking personal, business, home and club expenses.
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MSBJ Holdings LLC's editorial objective is to provide our readers with a forum for personal suggestions, investment ideas, and health & fitness recommendations. Our articles should not be construed as specific advice for the reader, nor does any article imply an endorsement by MSBJ Holdings LLC. Your best course of action must be based on your individual situation.
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