Getting the Most Out of Your BudgetMarch 29, 2012
No financial magician we know can give you a magical formula for creating a budget that works for you. There are some tips you can follow, however, that will help you get started.
First, stop thinking of it as a "budget" and start thinking of it as a "spending plan". And while the word budget usually means cutting back and doing without, it's not necessarily the cutting back as much as it is the spending in such a way to get what you really need or want without ruining your finances.
It's best to work on a plan in which your savings focus on financial goals, such as retirement, paying off debt, or even buying a car.
Try these four steps:
- Follow Your Money â€“ Track each day's expenditures for a month, then decide what you can live with and without to change your spending habits. This may teach you new savings skills.
- Review Fixed Expenses â€“ While you can't avoid paying for food, housing, and utilities, you can find ways to trim those costs. For example, pay only for phone services you really need. Check other areas for cutbacks.
- Cut Some Corners Variable expenses like grocery bills and entertainment are areas where excesses are most easily trimmed. Cut corners by clipping coupons, buying in bulk, trying house brands, and looking for discounts. Pennies saved per purchase grow into dimes and dollars.
- Set Goals â€“ Decide what you want to accomplish and rank the importance of the goals. Target big items like saving for college or retirement, but don't ignore smaller prizes like family vacations.
Sticking to your budget can be accomplished easily if you set your mind to it and gain the cooperation of every family member. Remember, your credit union is a great place to set up savings plans for whatever goals you have in mind.