"Come unto me, all ye that labor and are heavy laden, and I will give you rest. Take my yoke upon you, and learn from me; for I am meek and lowly in heart' and ye shall find rest unto your souls. For my yoke is easy, and my burden is light."
Matthew 11:28-30
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Living Within Your Budget
Author: Chemain Evans
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
temporarily (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.
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© 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
is ideal for tracking personal, business, home and club
expenses.
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