How to Manage Money On A Limited Budget
Are you short on cash on a regular basis? In a bind, with money. Below Information on how to save money and manage when there isn't much to work with.
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Instructions
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Hey All,
The first thing you would want to do is have a bank account or an account where you can deposit money. There are many banks online as well, as in your city. If you already have a checking account what you will want to do is create a savings account also attached to that or have a location to transfer money too, so that you do not use what goes into savings.
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Now that you have created your savings account whether with your bank, or a commodities or an online bank, or even something as simple a paypal, you are ready to begin saving.
Always pay yourself first at least a little bit. What you can now do with the checking account is set it up to automatically deposit, into that savings account, you can generally set this up online or set it up when you set up the bank account.
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Now that you are set up, let's begin.
Write down all your bills, and prioritize them such as Rent/Mortgage, credit card, Car payments, Loans, Daycare(if you have kids)etc. Rent/Mortgage should always be first no matter what. -
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Your Rent/Mortagage should not ever be more than 45% of your income, for example if your income is 2500.00 a month you should not exceed, 1125.00 for rent.
Now break down the rest of the bills you have, and see how much each bill is, once this is done now prioritize based off what has to be paid, and balances, starting with the lowest balance bills first generally these are living expenses such as water, trash, Sewer, etc. -
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Now that you have everything broken down, you can figure out how much you can save a month. If you figure that you have 350.00 left over every month after bills, then you should in fact be able to save 350.00 a month and this is how much you should set up to save.
For Example: If you get paid 2500.00 and you get paid bi-weekly then every two weeks you would want to transfer 175.00 to your savings account, or online bank. You want to save this money in a location where you cannot easily access it, otherwise it will get used. At the end of 12 months saving at that amount you would have saved 4200.00 just on you own. Now you can take that and turn into a CD money market or something that gains better interest or take it out and pay off bills.
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If for some reason you are nervous about transferring that much money a because as we all know things come up you still want to pay yourself first, therefore set it up so that 25.00 goes out on each respective payday, it is not as much of a hit to your regular money but it is still allowing you to save for your future. Smaller amounts do ad up over time, and if you do not ever do anything with it fifty dollars a month still equals 600.00 by the end of the year. Now you can pay off bills with that and start over or simply keep saving.
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You will want to set up an allowance for yourself as well. For this you want to set an amount to spend from pay period to pay period. What this does is allows you the freedom to spend but the responsibility to not overspend. You can bring your lucnhes to work. It is cheaper to buy food at the grocery store and make your lunches that it is to buy lunch out everyday.
If you are however still determined to buy lunch out, give yourself an allowance. For a two week period maybe 50.00 for the two weeks, for lunches, sodas, etc. Write down what you spend after that two weeks, did you run out of money do you have money left over. If you have money left over then next time use a little less for your allowance if you ran short by the end of the second week look at why, what did you spend money on. This should help you get an understanding of where your money has been going during the weeks at work. This way your bank account stays as it is and just pays the bills like it should. While you use cash for an allowance.
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Many banks now also have what we call keep the change, where it will take the change left from a purchase, and transfer it automatically into your bank savings account.
For Example: If you spend 25.01 then 99 Cents goes into savings. If you can manage to end purchases on .01 on a regular basis, and you make 75 purchases in a month like that, then you can get 74.25 into your savings account.
Last be sure to keep track o everything you spend on, and also remember some banks computer systems do not always process everything over the weekends, to assist on weekends, pull cash out to use for the weekend.
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Tips & Warnings
Use the Keep the chnage transfer
Do not suggest setting it up automatic, if your savings account is not with the bank. If the savings acount is with the bank then set the trasnfer to savings account as automatic.
If you do not have abnk account becuase you are on Chex Systems or telecheck, you will need to take cae of those. There are some banks that will still take you.
If you wish to take care of Chexsystems refer to my article titled How to remove yourself from Chexsystems.
ALWAYS< check your bank account make sure there are not random fees being taken out for things you do not know about. Always know what is going on, never let your accuont sit without checking on it.
Know your limitations, if 50.00 dollars a month is too high to save then drop down to 25.00 dollars a month, or even lower.
Read terms of service on bank decrees when setting up accounts.
Make sure you understand there fees and processes.
Look around find savings acounts that pay you the most interest so your money is working for you.
