To be able to live a comfortable life without the creditors breathing down your neck, budgeting is essential in life. However a growing number are living a paycheck to paycheck lifestyle. If you want to change that, you need to learn better budgeting habits. Here are five ways you can better budget your money every month.
Tip #1: Calculate Your Expenses
Figure out how much you spend in a month. Don’t just calculate monthly bills like the water, gas and electric bills, but include entertainment and any other types of expenses too. To better help you compile this list, check your credit card and bank records.
Tip #2: Blast To The Past
When calculating your monthly expenses, don’t just look at last month. You need to take a look at spending habits over the last 3-6 months. You can get a better idea of where your money is going that way. The reason is that some months you may have a vacation, other months there’s some extra shopping and then other months there’s a car repair you did. So month to month your expenses will vary, but over the course of a few months they should average out.
Tip #3: Organize Your Bills and Paperwork
Now let’s take a look at your list that you created. Some items on your list are going to be necessary expenses. These include items like your rent, food and utility bills. Then there are other expenses that are not necessary. These include items like restaurant visits, video games and electronic gadgets. By separating these expenses you’ll get a clearer picture of what is going where, and where there is room to make changes.
Tip #4: Make Changes
If you find room to make changes, then be sure and do so. For example, if you have a big cable package and don’t use half the channels, consider downgrading or getting rid of your cable altogether. If its hot but not too hot opt for using a fan instead of the air conditioner. You don’t necessarily have to eliminate everything, just cut back on as many things as you can. There are many ways to cut back on spending so just look through your list and make the changes.
Tip #5: Review
After a few months of the cutbacks you have made, go back and update your budget. Use the last several months of expenses to get accurate results. Hopefully if you’ve implemented the changes you planned to make you’ll see some progress. At this point, don’t quit. In just about every budget, there are ways to cut back even further. Remember that the more you cut back the closer you’ll be to not suffering from the paycheck to paycheck syndrome.