Living Within Your Budget

Having a budget and living within it are two different things.
There are always things that we want (or need) and credit is so
easy to get. This article will discuss ways to help you establish
good budgeting habits.

First, determine why you want to budget. You need a pretty
good reason or you won't feel obligated to do what it takes. Do
you want to get out of and/or stay out of credit card debt? Or
save for a new car or big vacation? Whatever it is, you need a
reason so that you won't be enticed to overspend. Write down
your reason or goal where you see it every day.

Second, examine your spending. Are you tracking your expenses
often enough? If you aren't looking at your expenses every few
days, you probably have no idea how much money you have
and where it is going. Spend a few minutes each day or at the
end of the week updating your records instead of saving it all
for the end of the month (or tax season).

Third, recognize why and where you are overspending. Look at
your expenses and see where you've crossed the line. Did you
have a large, unexpected medical, house, or automotive
expense? Does this happen frequently? Establishing some
short-term savings can help cover these expenses when they
occur.

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:

-Increase your car insurance deductible to $500.
-Check around for better car insurance rates.
-Conserve utilities when possible.
-Consolidate your credit card and other consumer debt into a
home equity loan and then cancel the cards, cut them up, and
don't apply for new ones.
-If you are renting, try to buy a house; tax advantages for
paying home loan interest often make it cheaper to own than to
rent.
-Eat out less; brown-bag your lunch; find less expensive places
to eat.
-Find cheaper entertainment (rent a movie instead of going out
to one).
-Consolidate errands to use less gas.
-Limit grocery shopping to one day a week; shop at more than
one store for groceries, if time permits.
-Shop around for a better long-distance calling plan or cell
phone plan.
-Borrow books from the library instead of buying them.

Some find it necessary to go to a cash-based system. 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 account.

The remaining cash is divided into envelopes marked for
expenses such as food, gas, etc. Once the money in an
envelope is gone, 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.

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! It's 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.

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 come 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 possible, but you must have a good
reason to motivate yourself. Track your expenses often. Cut
expenses and/or increase your income if you need to. Decide to
make changes and do them today.


Chemain Evans is a quality control specialist for Simple Joe, Inc. Income & Expenses PC software is a Simple Joe product that is a quick and simple way to keep track of your expenses and stay within your budget. Learn more at http://www.simplejoe.com

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