Creating a budget is more than just tracking things. You also need to comb through your household spending and cut out the waste. This is essential to getting your financial life back on track. Some of those things you thought you couldn’t live without are draining your money.
The time and effort you spend here, will determine the success or failure of your money management endeavors. You may have to be ruthless in deciding what stays in your budget and what gets eliminated.
Cutting Waste – Where To Start
Remember, nothing is safe from the knife, but here are just a few items to look at first when evaluating your household budgeting plan:
- wants and desires (only when you can afford it)
- impulse buys (think … afford? … justify?)
- conveniences (are there less expensive options?)
Never take from necessities to pay for any of the above!
You need to include some fun money when you are budgeting for household spending and find fun things to do that cost less.
You, and your family, need relaxation and fun times together, so don’t leave this out. Just keep it within reason. Instead of doing something that costs money every week, cut it down to once or twice a month. If you don’t have something to look forward to, you are much less likely to maintain your budget effectively.
Determine Want/Need Vs. Necessities
Ask one question, and you will be able to determine what is a need or want, and what items are necessities. Can I Survive Without It? If you can, then its not a necessity!
Necessities such as your home, food, clothing, transportation, medical, and utilities are things you really can’t live without. However, that doesn’t mean you can’t cut out the waste in these areas.
One of the first things you have to do before any debt can be eliminated is to stop using charge accounts and credit cards. If you continue to use these, you are only continuing the problem, and building on it, not solving it.
Build Your Emergency Fund
If you don’t have an emergency fund, start one now! Save about $1,000, or as close as you can get. This fund is only for emergencies! Use it when the car breaks down, the water heater needs replaced, or things like that. Household budgeting has to include paying yourself first, and setting money aside for unexpected expenses. Your emergency fund will keep those credit cards in your wallet, and out of the cashier’s hands!
Cutting The Waste Begins With …
Remember, the only way to cut expenses, is to know where you are spending your money to begin with. You need to track your spending, to reduce your spending.
If you love spreadsheets, you will love the budget spreadsheets offered by Vertex 42. Some are even free and all of them are easy to download!