Financial experts say the secret to stop living from paycheck to paycheck is to spend less than you earn.
Sounds simple, in theory, right? The fact is, managing your money requires planning and determination. If you’re experiencing financial strain, you may benefit from these tips.
Here Are Some Tips to Start Budgeting
Examine Your Spending Habits
Before you can fix your money problems, you need to figure out what’s broken.
Look back on what you’ve spent over the past three months or take a few weeks to track your expenses. These may include:
- Necessities: Housing, utilities, transportation, groceries.
- Reoccurring bills: Credit card debt, student loans, car payments, cell phone service, internet, cable.
- Flexible/discretionary expenses: Take-out meals, gourmet coffee, entertainment, clothing, gym memberships.
“This is an opportunity to take a comprehensive look at your spending, and it is also the easiest way to look for areas where you can cut back,” notes the Consumer Financial Protection Bureau.
Re-Evaluate Your Expenditures
Now’s the time to go on a “spending diet.”
“With some creativity and research, you will find that there are viable free or low-cost alternatives to many “necessary” services,” says Wallet Genius.
For instance, cut out the take-out. Find a less expensive cell phone service. Ditch cable for a low-cost streaming subscription. If you’re in debt, try contracting your creditors to work out a payment plan.
Set Your Budget
Once you know exactly how much money you have to work with, prioritize your bills and start dividing your funds. Use an Excel spreadsheet or online tools to help keep track of income and payments. The Consumer Financial Protection Bureau offers helpful worksheets you can download.
Understand your fixed and flexible expenses. Fixed expenses are the same dollar amount every month, such as rent or a mortgage payment. The amount of flexible expenses can vary from week to week, like the cost of groceries and gas.
Some experts support the 50-30-20 budget, which recommends spending no more than 50% of your net income on necessary expenses and no more than 30% on wants. Save the remaining 20% for long-term goals and unexpected bills, like car repairs.
Find Other Ways to Save
Many grocery and department stores offer loyalty cards that provide excellent savings. Discount warehouse clubs offer a variety of goods at markdowns that can easily offset the annual membership fee.
If there are things you can’t give up completely, try finding cheaper ways to obtain them. Some resale shopping apps offer reasonably-priced designer and lightly-used clothing and accessories. You can also register for rewards apps that give you money back from activities and purchases.
Revise as Needed
When life changes, so should your budget. Review your finances when preparing for milestones like marriage or the birth of a child, or saving toward a long-term goal, like buying a house or planning for a family vacation. You’ll also want to make adjustments if you get a raise – setting aside more for savings and retirement.
Ready To Start Budgeting?
If you need help with budget planning or getting out of debt, you can receive free assistance from your local Consumer Credit Counseling office.
And if the best solution to your money issues is to find a higher-paying job, contact the job placement experts at Pro Resources Staffing Services.