Optimize Your Budget: Answer 3 Simple Questions
After you’ve created a budget, you should be able to see where all of your money is coming from and where it’s going. If you’re already thinking “budget is a four-letter word!” start here with a few tips on getting started with the basics of budgeting. You can also use free services to quickly get a glimpse of where you’re spending your cash without having to do all of the leg work of categorizing expenses up front. Sometimes, discovering how much of your money is being spent can be discouraging. Budgets are useful tools though, and they can teach you quite a bit about what you can do to reduce spending and increase savings.
If you want to cut down on your spending, make a list of the non-essential items in your budget.
Evaluate each item you spend money on by quickly answering the following questions:
1. How often do I actually use this product/service?
If you’re spending money on a hobby or something else and you use it frequently, that’s money well spent. If you find yourself looking at a magazine subscription you haven’t read all the way through in months, or a gym membership that only gets used once every six months, it might be a good idea to cancel that subscription or membership and put a mark by that item on your list as something for the ol’ savings account.
2. Is there something else you want more?
If you want to save money more than you want your 4,569 channels of TV, find a way to cut back. It doesn’t always have to be savings, however. If you want a new mountain bike more than you want new clothes for work – it’s easy. Prioritize your spending and dish out cash on the things you need/want first. Then, if you have money left over (that you’re not going to save) you can buy those other things.
CC Image Courtesy of thorne-enterprises
3. Is there a cheaper way to do this?
One easy way to cut out an expense is to find a less-expensive way to do the same thing. If you like to run at a health club, see if there is a local high school or college that will let you use their track for free. If you’re paying for cell-phone minutes you’re consistently not using, call your company and see if you can negotiate a lower bill.
CC Image Courtesy of thetorpedodog
Another easy way to cut costs is to split an expense with a friend or family member that will use the product as well. If you both use it half as much as you think you do, you should both be able to use it.
At first, it might seem like there isn’t anything you can cut out of your budget. But, if you’re honest with yourself and really get creative, you can always find ways to save. Measuring and tracking what you’re saving is a great way to motivate yourself. Remember, you’re not supposed to go crazy and cut everything fun and exciting out of your budget. Just take some time to evaluate where your money is headed, and you’ll increase your savings and enjoy where you’re spending your money even more.
Tags: budgeting, free personal finance software | Categories: Personal Finance, Saving |
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