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Money Matters: Creating & Using A Budget

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Even when the economy is good and you’re living comfortably on the money you’re making, it’s a good idea to use a budget.  Many people cringe when they hear that word because they think it means you can’t have any fun or spend any money. That’s far from the truth.

When you plan a budget, you must be realistic about what you’re spending and saving.  If you’re not sure how much you spend, do an average of 3 months.  Note that this can be adjusted later on.  The first step is to get everything down on paper so you can see what you’re really spending.

You Might Be Really Surprised

Usually, people who create an honest budget by tracking their spending each month and writing everything down find that they’re shocked at how much they’re paying out. It’s not just the bills, but also the little things like eating out, coffee in the morning, and small purchases that add up.

For one month, keep track of every cent you spend. Avoid hiding anything or sweeping it under the rug. Save all of your receipts and write them down. That means bills, spending money you withdrew from the bank, and anything else that was paid out in that time frame.  At the end of the month, you’ll have an accurate picture of what it’s costing you to live for 30 days.

How to Lower Your Costs

After you get over the initial shock of your tracking experiment, you’ll likely want to find ways to spend less. There are many ways to lower expenses, and they can depend somewhat on how you spend your income. Everyone is different, and not every idea will apply to each person.

Consider these ideas in order to decrease how much you spend each month:

• Skip going out for lunch and coffee by bringing these things from home.

• Negotiate your utility bills.

• Carpool or use public transit.

• Buy groceries only during sales and stock up on often-used items.

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How much are unnecessary things really costing you? Is it worth it? When you really think deeply about those questions, you’ll likely find that living a little more frugally would give you a better quality of life and freedom to do more things, like travel.

Budgeting doesn’t have to steal your joy.  It gives you permission to spend.

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