Whether radical right or moderate left, everyone agrees that a balanced budget needs to be achieved. However, it leads to the issue of “is your budget balanced?”
I work with clients in improving credit scores and lowering their debt. Lowering debt and improving credit scores are closely related to balancing your budget. I often ask clients to keep track of their spending. I don’t care if it is putting money in an envelope or keeping track of your expenditures via online from an online checking account. I prefer the latter as that is how I maintain accurate records of what I spent where and on what.
One of the first aspects of balancing the budget is actually determining what you earn to the penny. This includes deducting social security, state or federal taxes, retirement, life insurance, etc. from your paycheck. I have an EXCEL spreadsheet where I maintain my earnings from both jobs. I know exactly what I earn each month from each job.
After identifying what you make (gross) and what you bring home (net), make a separate column for expenses. I divide my expenses into my bi-weekly paychecks from each job. If you are paid monthly, this will be one list from which to deduct expenses from one paycheck. If you are paid bi-weekly, the first and 15th of the month, then you will have two paychecks with two expenses listed. List each expense by its name and its amount. I suggest inputting your basic recurring bills first, i.e., mortgage / rent, utilities (electricity, water), vehicle note payment, gasoline expense (either monthly or bi-weekly) then food, and personal care items. Tally your payments and tally your expenses; compare. If you are under on the amount of money you earn and over on expenses, then you need to start looking for areas in which to cut.
Notice, I did not suggest including a “fun” line item account in your expenses before calculating your expenses. The reality of balancing your budget includes identifying exactly what you have to spend, then you can look to either add a “fun” line item account or that is also included in items that need to be reduced or illuminated from your budget. I recently paid off approximately $4,000 or more in six months by following this formula. I did without many times, but my credit is on the rise, my debt is paid and I am strictly following the budget.
Areas in which to cut may include illuminating or deleting:
A landline phone versus a cell phone or switching to a pre-paid. Look at your monthly minute usage and to whom – are these calls you can do after hours and not at peak billing time or can they be done from a landline at home; Internet – do you need satellite for daily use or can you use less-espensive dial up? Television – do you need 100-plus channels? Can you switch to an antennae (archaic I know but still useful); Eating out – fast food, restaurant. Can you cook more at home? Can you buy in bulk and save? Entertainment – can you go for walks versus going to the club? Can you watch a movie at home versus going to the movies? Can you wait a few months to see the latest blockbuster hit that will be on cable/satellite if you select to keep either or have either. Food – review how many times you go grocery shopping. Do you travel to three stores to save 10 cents when you can go to one, pay the 10 cents more but save $10 in gasoline? Gasoline – do you gas up during the morning hours when you get more gasoline for your money? (Gasoline vapors rise during the day and there is scientific research that shows you get more for you money by buying during the cooler morning hours). Do you use a grocer’s card to earn points for gasoline? Clothes – do you buy mix and match clothing to further your selection in your closet? Tip: have basic colors such as black, tan, white, blue and multiple colored shirts as well as solids that will enable you to mix and match. Same with shoes and purses. Trips – do you plan your trips, i.e., on your way home to do you do grocery shopping and clothes shopping versus going home, then going back out again? Coinage – I take my lose coins from each shopping trip or bill payment and put them in a jar in my truck. I use that change to either make emergency purchases or to deposit into my checking account. On one trip alone I had $20 in change. Bank cards – Ideally, have one credit card that you keep current and paid off for emergencies; however, make sure you use it as “cash” and make sure you are earning awards, such as points toward gasoline, clothes, and coupons. Reviewing your monthly bills – read each thoroughly and make sure you can account for every line item charge. I found where a phone company tagged on a line item without my consent! Coupons – only use coupons to buy what you need, not what you might want and could save by buying.
In summary, review your spending habits and look for ways in which to save. Common sense goes a long way toward saving money and balancing your budget.