Budgeting For Your Future, Part 3 - Calculating and Adjusting Essentials & Non-Essentials
Is the thought of putting a budget together similar to your thoughts about having a root canal done? If so, you aren't alone.
If you've never put one together before, or have never felt the need to operate under one, it can seem like a very daunting task.
But in reality, budgets aren't all that hard to devise and put into use.
When you get used to them, and understand the significant value a budget has when you take your future into consideration, you'll be very happy you sat down and put one together.
There are three steps you'll need to go through when putting a budget together.
1.
Categorizing Your Expenses 2.
Estimating What You Spend 3.
Calculating And Adjusting In part three of my series on putting a budget together, I'm going to discuss calculating and adjusting your essential and non-essential budget items.
The first step in this process is to add up both your essentials and non essential expenses separately.
Then, subtract your essential expenses from your monthly income.
If there is any money left over, subtract the non-essential expenses from that figure.
If you've got money left over, you are in great shape! Don't fall into the trap of thinking you've got money to burn, so to speak.
That new boat, or new TV can be put on hold.
Put that money into a savings or investment plan for the future.
But, if you find that after doing the calculations you have a negative number, you've got some work to do.
Start looking for places you can cut back on he non-essentials.
Maybe it's time to cut your cable out, or at least down to the basic level.
Or, maybe you can start reading the newspaper or your favorite magazine free online, so you won't need the subscriptions any longer.
Go out to eat once a week instead of 4 times a week.
You can also look to essential expenses such as electricity or heating oil expense.
Turn the lights and electric devices off when not in use! Or, turn your heat back to 60 degrees in the winter and wear an extra layer in the house.
My family started doing that a few years ago and we've cut our heating oil bill more than in 1/2, from $2,500 a year down to $1,000.
It can be done.
When you go through this exercise, don't give up hope if you find that you'll need to make some significant cuts in your spending.
It can be a shock at first, but once you begin to understand how cutting costs now can have a significant & positive impact on your future, you'll be happy you took the steps to make the cuts.
In order to track your expenses while on the go, you'll want to take a look at a cheap family budgeting book.
You'll find them at most office supply stores.
If they don't have a smaller sized book that you can take with you, check out the Budget Map dot com.
They have a neat little ledger that will fit into your checkbook and really makes it easy to stick to a budget because you'll have all the information with you at all times.
It'll set you back around $30, but it'll be money very well spent.
Many people find it easier to deal with budget struggles by paying your bills each time you get paid.
Some get paid twice a month, some once a month and others once a week.
You may find that paying bills may be made easier by dividing out your bills based on how often you get paid and sending in the resulting figure each time you get paid.
This way, you aren't faced with paying the full amount when the bill is due.
For example, if you pay your mortgage or rent once a month like most people do, but you get paid twice a month, write a check for half of your rent or mortgage payment every time you get paid.
Or what about your insurance bill that you pay every six months? If you get paid every two weeks, write 12 smaller checks instead of one bigger one when the bill comes in.
If you've never put one together before, or have never felt the need to operate under one, it can seem like a very daunting task.
But in reality, budgets aren't all that hard to devise and put into use.
When you get used to them, and understand the significant value a budget has when you take your future into consideration, you'll be very happy you sat down and put one together.
There are three steps you'll need to go through when putting a budget together.
1.
Categorizing Your Expenses 2.
Estimating What You Spend 3.
Calculating And Adjusting In part three of my series on putting a budget together, I'm going to discuss calculating and adjusting your essential and non-essential budget items.
The first step in this process is to add up both your essentials and non essential expenses separately.
Then, subtract your essential expenses from your monthly income.
If there is any money left over, subtract the non-essential expenses from that figure.
If you've got money left over, you are in great shape! Don't fall into the trap of thinking you've got money to burn, so to speak.
That new boat, or new TV can be put on hold.
Put that money into a savings or investment plan for the future.
But, if you find that after doing the calculations you have a negative number, you've got some work to do.
Start looking for places you can cut back on he non-essentials.
Maybe it's time to cut your cable out, or at least down to the basic level.
Or, maybe you can start reading the newspaper or your favorite magazine free online, so you won't need the subscriptions any longer.
Go out to eat once a week instead of 4 times a week.
You can also look to essential expenses such as electricity or heating oil expense.
Turn the lights and electric devices off when not in use! Or, turn your heat back to 60 degrees in the winter and wear an extra layer in the house.
My family started doing that a few years ago and we've cut our heating oil bill more than in 1/2, from $2,500 a year down to $1,000.
It can be done.
When you go through this exercise, don't give up hope if you find that you'll need to make some significant cuts in your spending.
It can be a shock at first, but once you begin to understand how cutting costs now can have a significant & positive impact on your future, you'll be happy you took the steps to make the cuts.
In order to track your expenses while on the go, you'll want to take a look at a cheap family budgeting book.
You'll find them at most office supply stores.
If they don't have a smaller sized book that you can take with you, check out the Budget Map dot com.
They have a neat little ledger that will fit into your checkbook and really makes it easy to stick to a budget because you'll have all the information with you at all times.
It'll set you back around $30, but it'll be money very well spent.
Many people find it easier to deal with budget struggles by paying your bills each time you get paid.
Some get paid twice a month, some once a month and others once a week.
You may find that paying bills may be made easier by dividing out your bills based on how often you get paid and sending in the resulting figure each time you get paid.
This way, you aren't faced with paying the full amount when the bill is due.
For example, if you pay your mortgage or rent once a month like most people do, but you get paid twice a month, write a check for half of your rent or mortgage payment every time you get paid.
Or what about your insurance bill that you pay every six months? If you get paid every two weeks, write 12 smaller checks instead of one bigger one when the bill comes in.
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