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Cut back on spending

Initially it may seem difficult to limit spending and stick to a budget, however there are a few practical changes that you can make everyday that will cut your spending more than you expect.

Firstly, alter credit card behavior.  Start to pay cash whenever possible.  This will help you avoid making a purchase unless you actually have the money available.  If you decide to make a credit card purchase, be prepared to pay all the balance off monthly.  This will save you a lot of money through avoiding interest charges.  If you already have a credit card balance, then transfer to a card with a low interest rate.  Also, find a card that does not charge an annual fee.

Another tip is to pack your lunch everyday.  All of those lunch hours spent at restaurants will add up.  Bringing your own lunch can save you several dollars every day, which will add up over time.

Check with your phone service provider and switch to a plan that better cater for your needs. This will help eliminate paying for services you do not require or being penalized for services you require but did not sign up for.

Stop throwing away the Sunday newspaper before skimming through the advertisements.  Clip some of those coupons and check out the sales.  This may seem tedious, but the savings are often worth it.  Many stores will double or triple the amount of the coupon.  This technique can save you up to 20 or 30 dollars each time you head to the food store. You could also subscribe to website that offer coupons and monitor those sites for coupons that fit your needs.

Additionally, refinance.  Refinancing your mortgage to a lower interest rate can save you a ton of money. This will be a great opportunity to reduce the monthly house payments significantly.  In case you have a timeline by which you want to have your house paid off then you will have to take that into consideration before you refinance.

Finally, bundle your insurance.  Many insurance companies will offer their customers lower rates if they purchase multiple policies.  For instance, some people use the same agent for multiple cars, and others combine their cars and house.  Always keep in mind that a dollar here and there really begins to add up.  Avoid the temptation of thinking that changing your spending habits wouldn’t save that much money. All those savings/cutbacks will build up into something substantial.

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budget, self-help

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Create and maintain a budget

Create and Maintain a Budget

An essential element to taking control of your finances and avoiding debt is to create and maintain budget. This task requires you to be committed to tracking your expenses and making adjustments to your lifestyle to fit your income. Let’s review some necessary steps that may help you achieve this.

In order to create a budget you will need to first compile all sources of your income and also make a list of all your monthly expenses.  Your income sources may include alimony, child support, side jobs, etc.  For your expenses, be sure to include housing, food, transportation, utilities, entertainment, etc.  To gain an accurate reflection of actual expenses, sit down each night and write down expenses, just make sure to save receipts.  Determine if your income covers all of your expenses.  If the answer is no, then some adjustments need to be made. The easiest may be to reduce, if not eliminate, some of your expenses since you have more control of this than increasing your income (at least in the short term).

Adjust expenses.  If your expenses exceed your income then you need to reduce some of your expenses. This might mean cutting the cord, reducing the amount you spend on entertainment, or cell phone plan, etc.  Review your expenses and eliminate those which are not necessary thereby reducing your cost of living.  Even if your income is adequate and covers all of your expenses, you may still want to trim some of the excess fat off your spending habits.  Explore ways to reduce your expenses and spend less. This can free up extra money for things such as investments, vacations, or college funds for your children. Analyze your expenses to determine whether the expense was necessary or not. Scrutinize your budget and seek ways to improve it. This can be done by either increasing your income or reducing your expenses.

Additionally, consider if you need to add new categories.  Some areas that we often overlook are debt reduction, emergency savings funds, and retirement savings.  An emergency fund ensures that you have a reserve  amount available to cover unforeseen circumstances (car emergency, etc), should it arise.  This will eliminate the need to use credit which can put a dent in your efforts to maintain a budget.

There are several advantages to sticking to your budget.  Firstly, most people have set financial goals that they would like to reach in the future.  Sometimes it may be a trip, a brand new car, or a college education.  A budget can help you save money to make these goals a reality.  Additionally, many people are crushed under heavy consumer debt.  Without a disciplined pattern of spending, it is virtually impossible to make much headway in reducing debt.  A personal budget will provide the necessary framework to begin eliminating these inflated account balances.

It is most important that you are realistic and prepared to stick to your budget.  Don’t give up if you are not able to meet your goal initially just keep at it.  Review where you went wrong (were you unrealistic? did something unaccounted for come up? did you spend more than you would have liked?).  More importantly, adjust your expenses as you go and don’t give up on the process.  The more you scrutinize and maintain your budget, the better luck you will have at achieving your goals.  If you implement it properly, your budget will enable you save money whilst helping you to meet your expenses. Saving should eventually come naturally and should come before any expenditure is undertaken. Saving even a small amount on a consistent basis will enable you to achieve your short term financial goals and eventually your long term financial goals It will also begin your journey into financial freedom. Therefore, it is in your best interest to create and implement a budget.

 

 

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budget, self-help

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