You have probably heard the phrase “living on a budget” quite a bit. This quote defines the struggle of your everyday working-class citizen. After all, we have expenses to take care of every day. From groceries and gas money to rent and utilities, we need to make our money do the most it can.
Even when we try to get the most our of our dollar, we can still run into pitfalls that cost us more than we may realize – and find ourselves needing assistance to hold out until payday. So how can we be financially responsible and conserve our cash? By setting a budget. And you can do it easily with these five fundamental tips.
1. Know your income. Take a very realistic look at how much you bring home each month, as this will be your starting point. By understanding how much money you have access to, you can more easily plan out how much you will spend and how much you should put back to save. Remember to account for taxes and any amount withdrawn from your pay.
2. Keep track of your spending. Whenever you buy or pay for anything, write it down or otherwise record it. Simply trying to memorize it can be unreliable. And don’t just keep up with big purchases – jot down every instance of spending, because even small spending can add up.
3. Find ways to spend less money. Most of the time, there are cheaper alternatives to things we pay for. Do you buy one brand of laundry detergent when there is an equivalent that costs less? Do you frequently buy movies or music that you rarely enjoy? By minimizing any unnecessary spending, you can free up funds that can be used at a later date for an important occasion.
4. Be honest and diligent. You will be tempted to feel that it’s not so important to keep track of your finances. It can feel like a lot of work and seem intimidating. But it is absolutely necessary. Stick to it, and your bottom line will look better over time.
5. Know why you’re doing it, and have a goal. Understanding the reason for a spending plan – that it is there to show you where you can spend less and save more – will help you work towards it. And having a goal to pursue – such as buying a house or taking a vacation – will help motivate you for the times when it gets tough.
Successful money management is a journey that can have its ups and downs, though not without options to help us get back on track. And an effective budget can become the road map to help us get where we want to be financially.