Own Your Money through Budgeting

Filed in Financial literacy by on October 4, 2016 0 Comments

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It was Yogi Berra, famous major league baseball player, manager, and cartoon bear (yes that one) who famously said “If you don’t know where you are going, you’ll end up someplace else.”
I’ll dare say that planning for the future means there’ll be ups and downs. And without a plan, you’re simply drifting in a sea of uncertainty while attempting to avoid unplanned expenses.

The alternative to such dire troubled waters is creating a budget. A budget is much like a map in which you chart where you want to go and assign the resources you already have to get there. It’s a simple way to own your money and thus your future.

But before you say, “My money’s too tight for this!” Remember that budgeting is about building confidence not guilt. If you think budgeting means giving up on everything you love and living a super-frugal lifestyle; or discovering you’ve been spending lots of money on the “wrong” things you’re far from the truth.

Budgeting isn’t meant to be about guilt shaming. It’s really about creating awareness. To help you get there, here are seven sensible steps that may help you control your finances so you can save for those short- or long-term goals or simply pay down your debt.
1. Be real about your income. Calculate your take-home pay (after taxes and other deductions) and record your monthly expenses for things like auto payments, mortgage or rent, cable, electric and other utilities, groceries, gas…you get the picture. Use a pen and paper or a smartphone app to put down what you are spending on average each month against what you bring home. If you have a family, keep their expenses in mind, too.
2. Plan next month’s expenses. You know your mortgage or auto loan payment is due each month, so allot space in your budget for these items. Because groceries and travel can fluctuate depending on the time of year, you should earmark additional money for those items as needed.
3. Make savings an expense. This may sound counterintuitive but the only way to take your savings seriously is to give it the same priority as your living expenses. If you contribute a set amount to your savings at the beginning of the month, your savings will grow so much faster and you won’t be able to “accidentally” spend that money on something else.
4. Look for ways to spend less. Buy generic instead of brand names. Use store coupons whenever you can. Carpool to work or use rewards points to save on gas and vehicle maintenance. Eat at home more often than going out to dinner.
5. Boost your income. Turn a favorite hobby into cash. Blog about something that interests you. Play a musical instrument? Teach lessons for money. Supplementing your cash intake can help pay down debt or boost your savings.
6. Pay down credit card debt. Each month, try to pay more than the minimum payment on your credit card bills. If you have a high-interest rate credit card, transfer your high balances to a credit card that already has a lower interest rate and no annual fee.
7. Prepare for emergencies. This should be a separate category from general savings goals. In order to be effective, your emergency fund can only be accessed for real emergencies—like sudden unemployment, an unexpected medical emergency, or a critical home or vehicle repair.

As I have said many times, it’s easy to spend too much on luxuries or to take on debt. The hard part is finding a way to budget that works for you. Use the steps above as a guide to spending smarter and saving more.

Remember it’s the little things that can add up to saving more money. For further guidance and support, there’s always free financial counseling if you need extra help.

Are you already budgeting? I’d love to hear what works for you.

About the Author ()

Melvin is the Smart Green Pig. "Smart" as in intelligent. Some would say "Super Intelligent" or perhaps "Genius". But also "Smart" as in surly and sarcastic, so watch your Ps and Qs! By the way, Melvin gets paid (quite handsomely) by SECU, so even though he's completely unbiased, some might think otherwise. Just sayin' (disclosin').

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