There are many people out there who are living from paycheck to paycheck, have debts, and are struggling to find a solution.
Don’t worry, others have also come across this dilemma and have successfully found a way out from a debt-filled life, and their money lasts longer even after they get their paychecks.
Have You Been Overspending Lately?
Before we get on to how they made it possible, let’s first discuss the root cause of why you are spending so much money lately. You might already be aware that being able to save has become quite difficult over the past couple of years.
And aside from your money spending habits from the past, there are also two more reasons why you are continuously struggling with managing your expenses.
Before, we could control our spending urges by not going inside a place where we will most likely spend more than a couple of dollars. But since the arrival of online shopping, our urges have been let loose because we only need an Internet connection now to buy whatever we want, whenever we want.
It is a huge convenience for people who don’t want to go out every day to buy their groceries or other daily necessities from the store. At the same time, we are also tempted to buy things other than the required stuff when we are online shopping because of the variety of goods displayed at these online stores.
Increased Prices on Consumer Goods
Everyone would already be aware of this fact. The effect of the increasing prices of consumer goods has made things much more difficult for people who are already struggling with money expenses.
What’s worse is that the prices don’t seem to be slowing down. If anything, they seem to be increasing, which means your expenses will continue to grow with time and you won’t have any other choice but to go with the flow.
What to Do?
Since the above reasons seem unavoidable, you would need a counter plan to adjust your expenses accordingly to the ever-changing demographics of the consumer spending trends. And the only way you can survive inflation, and the rising cost of living and shopping is by budgeting like a pro.
Having a budget can lead to financial success for you and your family. However, most people do not plan a budget because they feel like they are limiting their needs, and most often give in to their spending urges. No doubt having a budget and sticking to it can be a tough task, but its overall results can be extremely beneficial for the future.
If you want to learn how you can create a budget and lead a debt-free life, you are in luck.
For your convenience, we have come up with a few tips that can help you create a budget that won’t burden you but instead leave you satisfied and help you save money at the same time.
Investigate the Flow of Money Spent
Before you can start your budgeting plan, it is of paramount importance to first realize where is your money being spent every month.
You will be surprised to know a few things when you take a bird’s eye view through the list of things you shop online or offline every month. You might come to realize how small insignificant things you bought could save you a lot of money at the end of the month. This investigation will also lead you to the realization of your bad spending habits.
Overall, this will help you in prioritizing what you need and what you don’t need to preserve your monthly expenses. You can even make a new list where you can cut out the extra stuff and improve your overspending habits as well.
Get to Know Your Sources of Income
It’s time to sit down and start working on your budget plan. And the first step is getting to know how much income you are making and what are your sources of income.
Some of the income sources can include your salary, alimony in case you have separated from your spouse, child support, pension, or any interest or investment income. Note down all of these income sources and how much you get from them on a notepad or a spreadsheet. After that, add all these expenses up so that you have an exact estimate of how much money you have gotten from them.
Figure Out Your Expenses
Now once you have completed the first step, the next step is to account for all of the expenses that are taken out of your bank every once a month.
Make a column on the same notepad or spreadsheet to separate the money you are getting and then the other one that you plan to spend for the month. Some of these expenses can include your mortgage or rent (for which you can get help with from a credit union), basic utilities, monthly consumer goods, all of your insurances and any loans you might have.
Once you have jotted them all down, calculate all of these expenses together so that you know how much money is necessary to spend during the month.
Estimate Your Disposable Income
When you have both amounts calculated, it’s time to subtract the money you get in with the money you would need to spend for the month. The estimated value you will get after that will be your disposable income.
As you become aware of your disposable income, you know how much extra money you have left to spend on the stuff other than your regular monthly expenses. You can use this income to either buy additional things for your personal need, or you can save the extra income for future purposes, or in the case when you need them for an emergency.
If you feel like there isn’t enough money left for you to pay off your monthly necessities, it is time for you to dig a little deeper into what you plan to buy and how you can adjust them to fit your budget.
You can make a list of the items that you need every month and the ones you don’t need that often. There is no need to buy things which are not required so frequently. You can also lower the quantity of the items you buy, such as buying just one rather than two if you think you can last a month with just one.
There are also expenses you can cut such as memberships to places you pay for but don’t really go and even cutting off on expensive eating habits such as eating out or having a coffee from Starbucks every morning.
Use Cash When You Can
Even with a budget, we can easily be tempted to buy things we don’t need in the spur of the moment. And what really makes us act on the urge is when we have our credit cards with us because we know we have the money on hand if we want to buy extra stuff.
If you are serious about saving your money and want to avoid that temptation as much as you can, then whenever it is possible, use cash when you go out shopping.
It is impossible to overspend with cash, and once it is used up, you can’t continue buying anything else. Make sure you take only the amount necessary for your shopping and nothing more. If the consumer goods are too expensive, you can leave a few things behind that you don’t need immediately and come back the next day to purchase them-with only a specific amount of cash in hand.
Be a Smart Money Consumer
Aside from saving up on your income, there are also ways you can use to save additional money and yet you don’t have to sacrifice on your needs.
Coupons are an excellent investment. You can use them to get goods at lower prices or a discount. Some stores even offer to double the coupons. There are also food store apps that provide a considerable amount of discounts to their new users.
It’s also a great tactic to save up on items that are on sale. Such as buying a lot of meat on sale and freezing it for later use instead of buying more meat that won’t be on sale next time. You can also lookup for stores online to compare prices of items and then choose to go to places where they sell things at a reasonable price.
Track Your Spending with an App
Some of you don’t like to use the old-fashioned way, which is using a notebook to keep track of all your spending records and updating it every time you spend your money on anything. You can save yourself the hassle and get the help of an app to keep records of your expenses.
Using an app can make your budgeting easier and smarter in many ways. Some of these directly link to your bank account, so it makes it easier to track your expenses. Moreover, they also alert you whenever you are close to spending too much of your budget and let you know when you have to start being careful with your money.