How to Save Money Living On Budget
In too many households, the income is not what it used to be, forcing individuals to budget money for the first time in their lives. Like everything else, budgeting can be learned. Once you master the basics, you'll use your budgeting skills to save money and wonder what took you so long to learn this important life skill.
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Instructions
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1
Determine your total monthly income. Use the after-tax amount that you receive in your paycheck.
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2
Record your expenses for a month. Include every expense, no matter how small, whether you paid cash or charged it to a credit card. After a month, categorize the expenses and write down the figure you spent in each category. Some common categories include: mortgage or rent, utilities, groceries, eating out, insurance, transportation, entertainment, child care, toiletries, clothing, gifts and home maintenance. Estimate a monthly value for categories you pay quarterly or annually. At the bottom of your list, add a "personal" category and a "savings" category. Put a figure that equals 5 percent of your total monthly income next to the saving category. Pick an arbitrary, relatively small amount and write it next to the personal category.
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3
Total the expenses from Step 2. Don't be surprised if they exceed your total monthly income from Step 1. Here is where it all gets interesting. Look at each category and identify those you can reduce in the coming month. You won't be able to do much about reducing your monthly rent payment unless you are willing to move, but if you try, you can reduce your spending in several of the other categories.
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Stop spending money on unnecessary items. Buy only items that you and your family need to survive. Use coupons or visit discount stores to save money on necessities. Before making any purchase, ask yourself if you need the item or just want it. Wait overnight and see if you stll think you need it the next day. Learning impulse-buying control leads to quick success for first-time budgeters. Follow this advice to save money on groceries, clothing, entertainment and personal services.
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Examine closely the daily lunches out with the girls at the office, that morning gourmet coffee stop or your premium cable subscription package. Instead, invite friends over for a Friday night pot-luck dinner, head for your local library and check out your community for free events.
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Rethink any service you pay someone else to perform for you. If you get a weekly manicure or pay someone to mow your lawn, clean your house or wash your car, you have plenty of room to reduce expenses. You probably don't want to give up these luxuries, but think how much more comfortable you'll be with a financial cushion in the bank.
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Be aware of your power consumption. You don't have to live in a dark house to save a few pennies, but making small temperature adjustments to your heating and cooling systems, washing only full loads of laundry and removing them quickly from the dryer rather than baking them for an hour, can save you dollars every week.
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Continue to tweak your budget figures until your expenses match your income. Don't reduce the savings amount -- it isn't negotiable. As you get better at living within your means, you'll probably want to increase it. Don't eliminate the small personal amount either. Everyone affected by the budget should have a small amount of guilt-free money to spend on anything his heart desires without making excuses for it. This keeps the budget from feeling restrictive.
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First time budgets are trial-and-error undertakings, but watching your spending patterns and adjusting them gives you the power to control your spending, rather than deal with your debt.
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Tips & Warnings
Live debt free, stop using credit cards to purchase items. Living this way may help your financial situation greatly.
Avoid bad credit loans with high interest.
Look for new ways to make money. You may run into money making online opportunities.
