Properly managing your money is an important skill to ensure financial success in your current situation as well as for your future.
It is easy to get into the habit of living paycheck to paycheck, or living above your means when you spend more than you actually make. But this can become a thing of the past if you decide NOW to create a budget, live below your means and put extra money in savings.
The first step to creating a budget is to calculate your monthly household expenses based on your monthly bills. Estimate a little higher for bills that vary month-to-month such as your utilities bill. Add in your estimated monthly grocery bill, monthly cost for fueling up your vehicle, gym membership, cable and internet, cell phone, credit card, childcare expenses, monthly subscription fees and all other miscellaneous bills you may have. Subtract this amount from your monthly income. Are you in the negative? Then it’s time to cut back so that you are not relying on your credit cards to fund these expenses.
There are many ways you can cut back so you can start living within your means. Here are several examples:
- Cancel your cable and join a less expensive TV subscription service instead
- Reduce the amount of driving you do to save money on fuel by carpooling
- Cancel your gym membership and work out at home or find a less expensive gym
- Switch to a cheaper, no-contract cell phone carrier’s plan
- Resist the urge to shop by avoiding the shopping malls or stop following your favorite brands’ social sites to prevent temptation to purchase new items
- Cook meals at home more often than dining out at pricy restaurants
- Pack a lunch every day for work instead of eating out
- Buy the generic brand of grocery items
- Clip coupons for items you regularly purchase
- Shop at the dollar store -many times you can find the same items for way less
- Stop lending people money – we often help out friends and family even though we shouldn’t because it puts us in our own financial rut
Next, think about any charges you need to pay on a quarterly or yearly basis. One example is the annual registration due on your vehicle/s. Add up all additional expenses and divide by 12. Put that amount into savings each month so you already have the money set aside when it is time to pay it.
Another thing to factor into your budget is gift-giving. Don’t overspend. Many people spend more money than they should on lavish gifts which puts them into debt. Create a practical budget for each person you plan to give a gift to and stick to it. It’s the thought, not the price of the gift that truly matters!
Make it a priority to put any extra money left over each month into your savings account. That way, if something unplanned like a hospital bill or car repair needs to be paid, you will have an extra fund set aside for these occasions.
Stick to a realistic budget, avoid putting unnecessary charges onto your credit card and start living BELOW your means. These responsible actions will provide you with a healthy savings account and financial security.