Life would be so much easier if money grew on trees. Unfortunately, it doesn’t, and that means that most of us have to budget our finances in order to make ends meet. But budgeting doesn’t have to be a grueling task that sends you into financial despair. There are plenty of simple tricks you can learn that will help you cut down your budget, leaving you with more money to spend or save.
Know Your Limits
The first thing you need to do is know your income per month. That’s your limit. Even if you own credit cards and use them regularly, don’t calculate the credit cards into your limit, because you have to pay those cards off eventually, and that money will come out of your income. So start your budget with your income.
Calculate the Necessary Expenses
Now you need to calculate your expenses. Only worry about the necessary expenses for now—the expenses that are fixed, because you pay roughly the same amount every month. These expenses will include things like rent, utilities, credit cards, loans, cell phone bills, insurance plans, and internet use. They will also be the biggest drain on your budget, so this is where you will need to focus the most on trying to reduce.
Bundle Your Plans
Look at your necessary expenses, and see if there’s a way you can combine any of them. If you have multiple types of insurance, like auto, home, and health, see if there’s a way to bundle them all into one plan at one company, rather than three separate plans at three different companies. Another easy one to bundle is your phone, TV, and internet. The biggest wireless phone providers also carry plans for internet and TV, and it’s cheaper to bundle everything under one plan than to carry multiple plans.
List Your Needs and Wants
Once you have your necessary expenses sorted out, you can take a look at everything else you spend money on per month. Prioritize these items by making two lists: your needs and your wants.
Your needs list will include everything that you cannot live without, like food and toilet paper. Your wants list will be everything else, from ice cream to video games. You can even break your wants list down even further, separating what you really want from what you would like to have. Use these lists when budgeting the rest of your finances. Plan first for the needs list, and then whatever is left can be used for a few items on the want list.
Use the Credit Card Perks
Make sure the credit cards you use benefit you. Find credit cards with rewards and perks that interest you, and then use those cards in the ways that reward you the most. This might be store bucks, a gift card, or a discount on gas. Whatever the perks, they are rewards you should take advantage of.
Make Shopping Lists
Before you go to any store, make a list of what you need, whether it’s for grocery items or clothing. Know exactly what you need before you enter the store. That way, you won’t get distracted by other items, or purchase products you don’t need. You can also cut costs even further by bargain shopping. You don’t need a particular kind of Dijon mustard when a generic store brand will do. Compare prices, and buy the cheapest you can find.
Save a Little Each Month
If you don’t have a savings account, open one. Then, set aside a certain percent each month to put in the savings account. It doesn’t have to be much—5% will suffice. If you want to put in a little extra on certain months, go ahead, but make sure you put at least the percentage you’ve stated. It may take a while for the savings account to grow, but after a while you’ll have a hefty amount in there you can use for an emergency, or possibly even a vacation.
With these simple tips and tricks, you can become a budgeting pro, always having the money you need when you need it—you won’t even have to plant a money tree.
Edson Senna is a business student. He enjoys applying what he has learned by writing about investing, finance, entrepreneurship, and other business-related topics. He also loves to learn about new software that helps businesses, like a business rules engine.