The trick to budgeting your money better is to be brutally honest in regard to what you spend. People play mind games with themselves and underestimate expenses. That never works, of course, and charges get put on credit cards. At credit card interest rates of 20 percent interest a year, debt begets more debt.
Beyond that, budgeting your money becomes a matter of developing habits. First, however, you have to get that realistic view of what you are spending right now. You can’t fix it, if you don’t know what it is. It’s like putting a band aid on a gushing head wound.
The initial steps take time, but to budget your money better, you have to put the time in during the planning stage. Then as time goes on, you tweak the budget. Ultimately, you’ll be making your money work for you.
Throw all of your bills into a file folder for a month. I keep a file folder for each category of budget, and that’s the ultimate goal since save for a few expenses, your monthly bills will fluctuate depending on the season. Over time, it becomes a habit.
Put it in writing. A spreadsheet works best. You can see weekly, monthly and yearly expenditures. To see that you spend $2,000 on fast food lunches and a morning coffee is sobering when it appears in black and white.
Once you have an idea as to what you are really spending on items, you can make changes to save money and create a budget that works for your family. For example, you find that you’re spending $200 a month on gas and electric. You’ve always run the air conditioning and heat as you’ve wanted because you could. You’ve been making ends meet by putting the smaller charges on credit cards or relying on bonuses and holiday gifts. You think your gas and electric bill is good because you have been able to pay it all along.
No so. You are paying for it elsewhere. The worst part is a few minor changes can bring that all into check. If you add a timer, insulate, allow your energy supplier to institute a peak hour program, you’ll save money without feeling a thing. That’s a budget that works.
Part of budgeting your money better is to include all of the items you spend money on in the budget. In addition to creating a realistic budget, it gives you a chance to see in black and white the ways you waste money. You will find items in that file folder of receipts that make you feel uneasy. Perhaps you’ll find that you eat fast food 5 days a week when you have food at home that would cost you half as much. Get that realistic view and you can make changes. Keep the rose-colored glasses on, and you’ll always have a budget that doesn’t work.
After you list all of the categories and items you spend money on in a month. Be brutal. Go category by category, and ask yourself what changes you can make to make your budget work. If you have a dog, do you pay to have it bathed, get its nails clipped and the like? With pets, there are many items you can do for yourself. Brush your dog’s teeth and you will avoid vet bills later on. Get a 20 pound bag of food once a month instead of those 5 pound bags each week during your grocery shopping trip. They seem like little things, but they add up and take the weight off of your budget.
Household items are another major draw on your budget. Buy your cleaning products, paper products and laundry detergent in bulk when it’s on sale.
Look at food that’s in season, and consider a farmer’s market. You’ll not only save money, but the quality will be better. Use coupons on items you use. NEVER use a coupon on an item just because it’s a good deal. Unless you use it, it’s not a good deal in the long run.
Look at the price per unit, not the total cost of the item. While it’s generally cheaper to buy the larger sizes, it’s not always true. Check the weekly circulars from the stores. If it’s a particularly good sale on an item you use, stock up. Bulk stores are good, but if you life alone, the items will go bad, so you actually lose money. Again, it’s all about being realistic about your lifestyle. It may be a good deal, but it may NOT be a good deal for you.
Follow this pattern through each category on your budget list. Make sure you have a category of miscellaneous items. Things happen. If you haven’t budgeted for it, you’re natural instinct will be to go to the credit card. We’ve already discussed the pitfalls of this move.
To make a better budget for your particular needs, review the items every four months or so. Your needs to today may not be the needs you have tomorrow. The more that spreadsheet is handy, the better the odds you will end up with a budget that works for you, instead of against you.
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