CHRIS & COTY'S MONEY TIPS

Everyone I have talked to recently, both young and old, say the same thing; times are tough, money is short. And all of them are talking about setting up a budget. Unfortunately, most them don’t know where to start.

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Here are some tips on how to set up a budget. And when you’re setting up your budget don’t forget to make it something you can live with. Creating an unrealistic “starvation/deprivation” budget will only discourage you more.

Here are some tips for getting started.

First and foremost, find out where your money is currently going. Most people don’t even realize they are wasting money in little dribs and drabs that add up to significant amounts of money by the end of the year.

Start by saving every receipt or jotting down purchases in a little pocket-sized notebook. That includes every time you buy a mocha latte, grab a candy bar at the checkout stand, or pick up a magazine with an article you want to read. It is essential you get familiar with how and why you spend your money.

While you are tracking your spending, make a list of all the regular bills you pay each month. There’s your mortgage or rent, your car loan, your credit card payments, telephone, electric, gas and water, car insurance premium, etc.

Total all these recurring monthly payment amounts together. That amount is your list of “gotta pay” bills. Of course, you can’t live without food and you need clothes to wear, gas in the car and school supplies for the kids. That’s why you saved all those receipts for a 30-day period. Now you know what you’re spending on food, clothes, entertainment and seasonal necessities. Add those totals to your recurring monthly payment amounts.

Next, add up your income. Not your gross pay but exactly what you bring home in your pocket every month. Now subtract your expenses each month from your income. Shocked? Probably not. You knew you were having trouble making ends meet but now you are armed with real numbers you can use to set up a workable budget.

There are some things you can do to reduce spending such as cut back on car trips to reduce your gasoline consumption, buy your clothes at consignment shops, track food sales at your local grocery and buy in quantity. Call your credit card issuer and ask for a reduction in your interest rate, cut down on gas, electric and water usage.

Look over the receipts you saved and your notebook entries. Do you really need that mocha latte every morning to get to work? Five dollars five days a week for approximately 4.5 weeks each month adds up to almost $300 a year! That’s money you could have used to pay off some of your debt. Get your books and magazines from the library instead of the newsstand and do you really have to see every new release movie?

Remember I said a “workable” budget and one you could live with? Well, reducing your spending and living within your income is the right way to do it but don’t start depriving yourself of everything you enjoy; just choose wisely what you will indulge yourself in.

With a little planning and effort, you can set up a workable budget to get through these difficult economic times. The extra money you save can be put into a savings account or used to pay down debt.

GET A FREE SAMPLE BUDGET FORM TO GET YOU STARTED.

More household budget resources

Good luck!