Understanding Your Finances – 5 Tips For Staying On Budget
July 3, 2013 1 Comment
Budgeting is the cornerstone of a great financial plan, and is a means to plan out your month in order to pay bills, spend, give and save money for the future! Most people don’t like the word budget, but a good budget, over time, gives you an incredible amount of freedom and maximizes the usefulness of your money. This makes you richer, without actually growing your income!
Now, I know budgeting is difficult, and something that we all struggle with. Today, I want to share with you 5 tips to keep you on your budget, which will bring you financial freedom!
1 – Overestimate Your Expenses
When you are setting up or revising your budget, many expenses that you have don’t change from month to month, like rent, mortgage or insurance bills. However, many bills such as your utilities, cell phone bills, car registrations and gas cost will change every month.
For these expenses, be sure to over-estimate so that you aren’t stuck running out of money. At the end of the month or year, you can balance your check book and put the extra money in savings, and you’re never caught un-prepared for your fluctuating expenses.
2 – Build an Emergency Fund
Cars break down. Appliances die. Layoffs happen. Computers stop working and health related incidents occur. Are you ready?
Building an emergency fund makes you ready for any situation that may happen financially. Financial experts such as Dave Ramsey and SuzeOrman suggest you keep anywhere from 3-6 months of expenses in an emergency, or rainy day fund.
This sounds like a lot, and will take some time to put aside. Once you have it, however, it is amazing the peace you feel knowing that the car can break down and it’s all going to be okay!
3 – Check Your Budget Regularly
You should re-evaluate your budget monthly to look for categories where you weren’t accurate with your estimate on spending. For the first few months of your budgeting journey, you will spend a lot of time revising things, but once you get the hang of it, you’ll fly through this process and just make minor tweaks.
4 – Organize Your Records
Be sure to keep copies of your bills, pay stubs, large receipts and past budgets in a filing cabinet or folder. It is truly amazing how easy it is to budget when you can look back at the previous year’s bills to estimate the current month. For example, you can make a great guess at your hot July electric bill when you have last year’s bill on hand!
5 – Deposit Money into Your Savings as if it were a Bill
A great way to save for big purchases is to treat them as if they were a bill. This makes them a priority, and ensures they don’t get cut out of your budget when a movie with friends or shopping for new clothes seems like a better option.
When you deposit savings money as if it’s a bill, you grow your most powerful wealth building tool. Then, you are able to turn around and do amazing things, such as buy a car with no financing.
When you buy items without debt, you spend much less because you are not paying interest to anyone! Plus, if you total a vehicle, you aren’t paying back car loans for a car you don’t even have!
Author’s Bio – Lana Johnson:
Lana is a freelance writer in her final year of College. Currently living in the US, she’s passionate about the importance of good Financial Planning and enjoys passing on advice to others through her informative articles.