One of the best ways save money is to budget! I know “budget” can be a four-letter word for some people, but it really can be so much fun!
If you’re new to budgeting, here are the basics:
1. Sit down and calculate how much money you bring home a month. This is called your net income. Your gross income is how much you make before your tax withholdings, retirement, insurance, and other deductions are taken.
2. Write down all of your expenses. This includes food, clothing, housing, transportation, utilities, medical/health, insurance, recreation, debt payments, and other personal expenses. If you have a checking account, go over the past 3 months and make sure you include any reoccurring payment you see.
3. Add up all of your income. Then in a separate column, add up all of your expenses. Subtract your expenses from your income. This number will tell you how much is left after all of your expenses, or how much you are short.
If you have money left over, YAY! You’re in good shape! Now let’s apply that money somewhere useful!! Remember — a budget is telling your money where to go, instead of wondering where it went. If you’re following Dave Ramsey’s Baby Step program, you will apply it to whatever step you are on:
If you don’t have any money left, I feel you.
The next step would be to figure out where to trim from to make the budget balance, so your expenses don’t exceed your income. That can be tough… but try to think of creative ways to reduce your expenses. Eat at home instead of dining out. Don’t buy anything unless it is an absolute necessity.
If things still don’t work and you can’t reduce your expenses enough, then try to find a way to increase your income. Get a night job, have a garage sale and sell off things you no longer need… these days there are so many ways to create income, even from your home. Moneycrashers.com has a list of some really creative ideas on how to earn income from home.
That’s it! Put everything on paper (or an Excel spreadsheet) and check in at least once a week to make sure you’re staying on target. You can use online services like mint.com to keep up with all of your bank accounts, debts and investments, as well as view your spending patterns. You can even customize and track your financial goals. It’s handy and free.
You can find great budgeting worksheets at Dave Ramsey’s website, absolutely free. Set a budget, set some attainable goals, and stick to them. There is no greater feeling than financial security and to know that you have enough money to pay your bills and put food on the table.