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Quick and Painless: How To Easily Budget Your Finances

By: Phil Rogers

Quick and Painless: How To Easily Budget Your Finances

While most of us will utilize plans for vacations, plans for the holidays, or plan out our weekly to-do lists, often planning how we spend our money is something we never get around to doing. Simply put, a budget is a plan, not necessarily an elaborate plan, for where to put our money. How much to spend, how much to save, what are the items needed, what are the items wanted and differentiating between the two.

It is easy to spend money and at the end of the day not know what you spent it on. In order to change your spending habits and develop a budget you must begin a daily journal. For one month you will make a daily list of everything you spend. After the month is up go over the list and highlight all the unnecessary items. Seeing what you spend on paper will tell you exactly where your money is going and what items you can cut out of your budget. Take some of the unnecessary items out of your budget a little at a time and each month work on getting the budget to where it is manageable. After a while your budget should work for you and not be just another chore to keep up with. Your goal is to end up with a budget that is not overly restricting but one that you will be comfortable sticking with for a long period of time.

In order to identify a baseline for later use in months two and three, we’ll first determine areas where expenses can be cut.

1. After tracking monthly unnecessary expenditures, average it down to weekly expenditures. Withdraw cash, but make sure it is less than the amount you spent last month. This cash is for any nonessential purchases for the month. You may run out of cash before the week ends, but there is only a few days left until the new week begins.

2. You probably eat out more often than you realize. Reducing the number of days per week you dine out is a good starting point. This number is up to you, but you should begin with a figure you will be most comfortable with and follow it for a month.

3. You can save on clothing by purchasing one piece at a time instead of a complete outfit. Make it a habit to check out clearance items first, then discounted items before visiting the rest of the store.

4. See how much you can shave off your budget by taking the time to compare shop for the best rates on necessary services such as trash pick up, interest rates on credit cards, satellite or cable and phone.

5. Withdrawing cash from only your bank’s ATM will save you the extra fees that you would pay when withdrawing at bank’s other than your own.

6. Always make a list prior to going shopping, and make sure you adhere to it. If you do remember something that wasn’t on the list, remind yourself that you can always return to the store. Most likely you won’t return for that item, which will save you even more money in the long run. Do whatever it takes to avoid impulse purchases in order to succeed in your financial goals.

By taking a look at where you are right now concerning your financial picture, you can start with small steps and not get overwhelmed. Create a budget to show you where you are spending and allow for a couple wants versus needs to transition yourself to a more mindful and planned money outlay. Plan goals that are easily achieved to boost your confidence and reward of accomplishment. Check your plan regularly and revise it over the months ahead. You will have a designated place for every dollar to go, and you will see you are more and more in control of your spending. You will find more cash is available to you, allowing you more freedom with a life on purpose.

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Pay off more than the minimum each month. Don't be content just to pay the minimum payment amount. For those who can't pay off the whole balance on their cards, it's important to try and pay as much as possible each month. Paying just the small minimum required each month will consign you to long-term revolving debt incurring enormous total interest charges over time. Card providers have lowered the minimum payments from 3 or 4 per cent of the outstanding balance to as low as 1.5 per cent in some cases in recent years. If you can't pay more than the minimum, it's probably time to transfer the debt off the card to a personal loan at a lower interest rate.

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