Living Within Your Budget
Chemain Evans
First of all, why do you want to stay within your budget? You need a pretty good reason or you won't feel obligated to do what it takes. Decide that you want to get out of (if applicable) and stay out of credit card debt. Decide that you would rather pay yourself than somebody else (especially the credit card company). Decide to save for a big vacation. Whatever it is, you need a reason so that when that you won't be enticed to overspend. Write your reason down on both your budget and where you track your money.
Secondly, are you tracking your expenses often enough? If you aren't looking at your money every few days, you really have no idea how much money you have and where it is going. If possible, spend a few minutes a day updating your records instead of saving it all for the end of the month or the middle of the next month!
Thirdly, why and where are you overspending? Look at your expenses and see where you've crossed the line. Did you have a large, perhaps unexpected medical, house, or automotive expense? This does happen infrequently. Establishing a short-term savings can help offset these expenses when they occur.
If your overspending is due to discretionary expenses like eating out, ATM fees, or other fines and fees (such as late returns on books, videos, or DVDs), you might need to change some habits. What may seem like little expenses at the time all add up.
Begin thinking of things in terms of what it costs you over a long period of time, such as a year. For example, if you pay $3/week to withdraw money from your ATM, that's over $150/year. Instead limit withdrawals to twice a month (or less) and that's over $75/year in your pocket!
Below are some other ways to reduce both mandatory and discretionary expenses:
Some people find it necessary to go to a cash-based system temporarily (or even permanently). This is sometimes called the "envelope method." It involves cashing your paycheck and depositing only what is needed to write checks for bills or to cover bills that are automatically withdrawn from your checking or savings accounts.
The remaining cash is allocated into envelopes marked for certain expenses such as food, gas, etc. Once the money in any envelope is gone, if you wish to make any additional purchases you either have to shift money from another envelope or wait until you get paid. This really helps to develop discipline.
Another thing to remember is that even if something you want or need is "on sale," you will usually pay more for interest on it than you save by buying on sale if you have to put it on a credit card. If you think you really do need an item, use the 7-day rule: Wait 7 days before purchasing something other than what you've budgeted for. You will often find that the "need" passes before the 7 days are up.
You may eventually find that there are no more places to cut and you need to increase your income. This doesn't necessarily mean getting a second job, although that is a possibility. Below are some other ways to increase your spendable money:
First, take a look at your tax return. If you're getting anything but a small return, you're letting the government earn interest for itself with your money. You probably wouldn't let anyone else do that! Consider raising your exemptions. You can acquire a new W-4 form to fill out from your Human Resource department or manager.
Second, save or invest wisely to obtain dividends. This is money that you don't have to work for! This is an example of money working for you.
Third, acquire new skills that can help you get a promotion, or even a new job. Get your GED or college diploma, if you don't have one. There is a lot of financial aid available, and you may even be able to attend college for free. A small investment of a few months or years could yield big dividends for many years.
Fourth, consider starting a home-based business. There are a host of tax deductions for home businesses, not to mention the extra income that may stem from just a few hours a week. Although a home-based business is not for everyone, you may enjoy it enough to turn it into your next career!
Living within your budget is entirely possible, but you must have a good enough reason to motivate yourself. Track your expenses often. Evaluate what is working and what isn't. Cut expenses where you can, increase your income if you need to. Decide to make changes and do them today. There is great freedom in knowing that you control your money, not the other way around.
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© Simple Joe, Inc. Chemain Evans is a quality control specialist for Simple Joe, Inc., makers of the popular Simple Joe's Expense Tracker PC software. Expense Tracker is a quick and simple way to keep track of your expenses and stay within your budget. Expense Tracker (http://www.simplejoe.com/expensetracker/index2.htm) is ideal for tracking personal, business, home and club expenses.
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