Creating a household budget may seem relatively simple, but sticking to it can prove more challenging. If you seek a little breathing room between the money coming in, and the money going out, traditional wisdom offers you two choices. Either make more money, or spend less money. However, a creative third option involves finding money where you did not realize you had it, in places more promising than under your couch cushions. Examine your income and expenses to find extra money in your budget.
Update your budget. If you have not looked at your household budget for awhile, you may need to update, eliminate or add to certain categories. Create an accurate picture of your income and expenses, remembering to include irregular increases and expenditures such as bonuses, interest on certificates of deposit or other long-term accounts, taxes and vacations.
Compare your bills and receipts to your budget. Your summer water bill and your winter heating bill will typically have higher amounts than the same bills in other seasons. Review your insurance coverage and premiums to ensure you have secured the best rate.
Fix the cash leaks. Staying true to your weekly food budget does little good if you blow your cash at the taco food cart outside your office, or indulge your weakness for double mocha frappes every afternoon. Set a weekly limit you can live with, and a separate miscellaneous fund that allows for some weekly spontaneous purchases -- but not daily ones.
Attack the big drains on your money. If your rent is punishingly high, you need to shop around or get a roommate. A high mortgage may only need a reputable refinancing makeover to get your budget on track. Rein in spending on processed and prepared foods at the market, and master a few basic recipes such as grilled vegetables, black bean soup, and pasta with marinara and vegetables.
Rein in your debt. Credit card debt gnaws away at your budget, making you pay repeatedly for spending done beforehand. Aggressively pay down your highest interest credit card, or transfer the balance to a better rate, and then go after it.
- Make short-term, quantifiable goals, such as saving a small amount every month for an emergency fund, as well as long-term goals, such as cutting down on retail shopping.
- Do not approach budgeting with the attitude of needing to give up your lifestyle. Consider it a challenge that helps you gain control of your finances and prepare for your future.
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