by Janelle Witting
We can yack all day about saving money, but if no one ever explains how to go about pinching pennies, it’s just a waste of time. Starting small is essential – forming the habit will be more beneficial in the long run than scrimping and saving for a month and then blowing all of that cash. Think of a budget as a diet. If you deprive yourself of everything you love right away, sticking to your budget will be so much harder. Instead, start off small – like cutting out your daily Starbucks – before diving in completely. Learning to budget smarter will help you breathe easier, trust me!
- Assess your income. Figure out how much money you actually get after taxes each month. If it varies, take an average between three months’ income. Many people have no clue how much they actually earn.
- Make sure bills are covered. Mortgage/rent, utilities, phone, cable, etc. should be a priority, since missing payment can trash your credit score.
- Take a debt inventory. Tally up all student loan, credit card, automobile, and mortgage debt, along with anything else you might be making installment payments on. These have to get paid – no negotiating.
- Track what you spend for one month. Don’t change anything – figure out what is draining the majority of your funds.
- Cut out the extras. Once you see a visual representation of your spending, you might rethink the 2am impulse buy of a laser toothbrush or the $30-a-week fast food habit.
- Put away the excess. Anything left over after you’ve paid bills, debts, and necessities/recreational spending that you’ve budgeted for, put in your savings account. It may seem futile at first, but even $50 a month can get you out of an unexpected situation.
- Be flexible. Sometimes, you just can’t control what you have to spend money on, and that’s okay! Just make sure you make up for an unexpected expense somewhere else in your budget, whether it’s immediately or two months from now.
Got any other quick and dirty budgeting tips? Leave ‘em here!