Budgeting 101
The economy is still up and down. One month job growth measures show increases, the next, it drops again.
Company mergers occur and layoffs follow. Sometimes it’s across the country and sometimes in your own hometown.
If you are faced with an income reduction or simply want to adjust your spending to re-focus your financial efforts to, say, saving towards a specific goal, there are some basic ways you can re-assess how you use that precious commodity–your money.
Ask yourself these questions and really think about your answers:
What can I do without?
What do I really need?
Is it really a need, or is it a want?
Go ahead, write the answers down. Your answers will be your guide as you further review your situation.
Create a budget if you don’t have one or review the one you already have. Sticking to a budget is kind of like dieting, you start off strong and then you start to fall off course. Keep it simple. Are there any expenses that can be adjusted or eliminated? Look for those hidden expenses.
For example, have you listed in your budget stopping for coffee or the drive-thru for breakfast on the way to work each day? What about going out to lunch? If you’re spending $7 to $10 a day on lunch, plus $3 for a cup of coffee each morning, your budget for other food just jumped up to $50 a week – or over $200 a month.
Could you pack a lunch, taking a sandwich or leftovers from the night before and use that money elsewhere? You could switch completely or eat a lunch from home every other day. Another option is to get a take home box if you eat out one day and save it for lunch the following day. (Doggie bags can be a beautiful thing when you’re trying to be conservative with your cash!)
Bring beverages (soda pop, tea, bottled water) and/or make your own snack packs at home (cookies, fruit, trail mix, chips) instead of feeding money into vending machines.
Eliminate pre-packaged meals and snacks as much as possible, as making food from ‘scratch’ is less expensive overall.
A basic rule to remember: convenience costs money.
A good way to spend less is to pay with cash and track your spending. After you figure your budget for the month and what your weekly “allowance” is that you can spend; only carry that much cash with you and you will be less likely to overspend. Studies show that handing over cash makes one think about the purchase more than if a credit or debit card is used.
At the end of the month, review your spending and see if you stayed on budget or not. If you stayed on target, put the extra cash into a savings account to start an emergency fund. That will help when unexpected expenses come up as to not cut into your monthly budget. If you did not stay on budget, then review your tracked spending to see where you overspent and adjust the next month.
Budgeting is not easy, staying on course is not easy but it just takes some time to get used to it but in the long run, you will be financially happy.
