skip to main content
<< Previous Main Next >>

B. Budgeting Tips

1. Track your expenses.

It's easy to figure out how much you make in a month -- just save your paycheck stubs and add up the numbers. Even if you work a couple of jobs with different hours, you can still get a good idea of your monthly income. Figuring out your expenses is a little harder. You may use a debit card for some expenses, cash for others, and maybe you have a credit card thrown in for good measure. You might have some expenses, like a car loan, taken out of your bank account automatically. So make the effort to track down all your expenses for a month. Understandably, the unexpected can happen so keep that in your mind as well.

2. There are numerous free budgeting tools, but all of them require some knowledge before you can put them to good use.

A pencil and a piece of paper is a good way to start (or an spreadsheet on your computer if you are so inclined). Two columns, one credit (cash inflow), the other debit (cash outflow). Yes, that's tricky but think of your 'debit card' -- it's money coming OUT of your bank account. Put your recurring expenses down first -- rent payment, car loan, student loan, utilities. Those are payments that usually don't change much from month to month but have to be paid every month. Skip a line on the page. Then, using the information you've gathered, put down how much you spend on food, clothes, gas and car upkeep, entertainment. Total the amounts (most phones are equipped with a calculator or you can download a free app). If your debit total is more than your credit total, you have to make some changes.

3. Decide where to make the cuts.

In Saving Tips, we discussed 'needs' versus 'wants'. Your student loan payment is a need. Your bar bill is a want. The important thing to remember is that budgeting is a great deal like dieting -- if you tell yourself you can never go to a movie again, that's when you will crave going to a movie. Understand what things in your life give you the most pleasure -- the biggest 'bang' for the 'buck' -- and include those in your budget. You might have to prioritize. The trip to Las Vegas might mean not going out on the weekends for a few months. But if you figure it in your budget and stick to your plan, you will find you have the money to do what you enjoy the most. You might also find that the items on the list that were costing you the most aren't really that important to you after all.

4. Reward yourself for sticking to your budget.

To use the dieting analogy again, that doesn't mean go out and eat a banana split after a week of careful healthy eating. Find something to use as a reward for meeting your goal, but don't blow the budget on it. Maybe you stayed under budget in food and you can buy a nice bottle of wine. Maybe you stayed under budget in clothes and you can get a new hat or wallet. Sticking to a budget takes effort and should be appreciated.

<< Previous Main Next >>