Making a budget to better organize your finances is probably the second most common resolution people make each year, right after vowing to stick to a diet and go to the gym. The idea of a budget certainly isn’t a new concept, especially in today’s economy. However, it can be just as challenging to stick to a budget as it is to use your new gym membership for more than a month. The goal isn’t to find a budget you can live with, but to find a budget that actually works for you. Here are some tips to get you started:
Look for Better Deals Among Your Current Expenses
The best place to start with your budget is with the expenses you have to pay each month. These are the ones that you absolutely can’t compromise on, but maybe you can find a better deal than what you are getting now. Start with your car insurance. Go over your policy with your insurer. While you can’t sacrifice coverage entirely, you can still save money by doing things like:
- Consolidating coverage by eliminating duplicate coverage or combining multiple policies.
- Evaluating your auto insurance every six months to make adjustments for changes in your insurance needs such as the number of drivers covered.
- Seeking deals for things such as having a good driving record or upgrading to a newer vehicle.
The same concept applies to your other creditors. Take a look at what you are paying on your credit cards, for instance, and see if you can make deals to cut down on interest rates or transfer your balance to a new card with a lower interest rate.
Keep Your Goals Realistic
It doesn’t do you any good to “fudge” the details of your spending habits, at least not when it comes to making a budget that really works. Realistically list your expenses for the month and set goals that you can actually keep. Divide your expenses into two categories: essentials and non-essentials. Essentials include:
- Basic needs such as food and shelter
- Utility bills
- Student loans
- Gas money
- Credit card bills
Essentials should be paid every month. Don’t get into the habit of making exceptions. If you find that you can’t meet basic expenses, consider credit counseling to get your finances back in order.
- Money for dining out with friends, seeing a movie, or going to a concert
- Impulse buying
- Updating your car’s sound system and other things you can easily put off
It’s not that you don’t deserve to go out with your friends, treat yourself to that new purse that’s on sale, or update your car, but these expenses aren’t absolutely necessary. If you need to make cuts, start with the non-essentials first.
Making Your Budget Work for You
Remember, nothing is set in stone. If you find that a budget isn’t working for you this month, make adjustments. Your basic categories should remain the same, but the actual amounts you have budgeted can be easily adjusted. Allow some leeway for unexpected expenses. A budget isn’t any good if one unexpected expense throws everything into chaos. Consider putting what you save each month into a savings account where it can gather some interest.
There are many different approaches when it comes to finding a budget that works for you. If one approach doesn’t work, try something else until you find one that fits your needs. Some people find it easy to use the envelope method and divide expenses by categories such as rent or mortgage, utilities, and spending money. Others find it easier to write down a list of monthly expenses and stay within that budget for the month. It’s really about what works best for you. Remember that a budget isn’t a punishment, it’s just a better way of keeping track of your money.
Tanya Hilson blogs about personal finance and budgeting, including how to lower expenses such as car insurance. If you are looking to cut back on your insurance payments, you can find a cheaper auto quote at carinsurance.org.uk.
The views and opinions expressed in this or any guest post featured on our site are those of the guest author and do not necessarily reflect the opinions and views of Everyday Christianity.
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