Simply Junior

Are you struggling to make ends meet and you just cannot figure out why? Do you have a budget that you struggle to keep to or do you live without a budget? There are certain secrets to how to budget money that you need to know in order to be successful with your budget. Here are a few tips to help you budget your money better.

First, spend an entire month writing down everything you spend money on. At the end of the month break down all your spending into more general categories like food, entertainment, clothing, etc. This will give you a very good idea of where your money is going and where you can make some cut backs.

Next, if you get paid by check once a week or bi weekly, then you need to set up your budget to accommodate that. For example, if you make $1,500 every two weeks and you take home roughly $1,100 of it after taxes, then your budget should be set up for $2,383 a month. this is what you will be making each month since there are 52 weeks in a year.

After you have your income figured out it is very easy to set up your budget. First, you have to make sure all of your bills are taken care of. Next, comes gas for your car and food. After that you need to put in any other necessities. Then, you need to figure in all your once a year expenses like car registration and license fees.

If your budget is set up on an income of $2,383 a month and your bills, necessities, and other expenses add up to $1,600 a month, then you will have $783 left each month. For the first few months you should be saving a lot of this. You should save until you have a full 3 months worth of bills in the bank as a cushion.

Last, you need to figure in savings, unexpected expenses like car repairs and medical emergencies, and you need to have an entertainment budget. You have to be realistic and understand that you are going to want to go out and have fun. Plus you have to know that sooner or later you are going to need to make car repairs and you do have oil that will need changed.

When you learn how to budget money it is easy to ignore the unexpected, but your life will be much less stressful if you have already planned for the unexpected before it happens. The funny thing is most people don’t even plan for the expected like oil changes, license fees, or Christmas spending. They think that because they are not monthly that they don’t need to budget for them. Don’t fall into this trap.

If you want to control your finances, you can’t let them control you. You gain control by making wise day-to-day choices, following the path towards long-term goals and by building a foundation of necessities, such as insurance and emergency savings.

In order to do any of these things — make choices, realize goals or save — you have to budget. I know it doesn’t sound fun. But it is the one way to achieve financial success.

Start by thinking about it this way — by sticking with your plan, you will gain more than you ever expected. Budgeting will allow you to realize your goals. You will have more money to spend in the long run.

No matter how much or how little you make, budgeting is essential. If you already think you know where your money goes without writing it down, try writing it down for one month. You will be surprised at what those pennies are adding up to be.

Budgeting lets you know where your money goes. You are managing it. You are able to start saving for a home, for college and for retirement. You can even find room for that trip to Hawaii.

Someone said once, and I really like the idea, that you can’t just make more money to have more money. You have to spend less than you make.

I will admit that software programs make it nice to track a budget. I used one for years to track our spending through our checking accounts. Not only can you easily balance your checking, you can print out reports that divide your spending into categories. You can easily print out the totals of your tax deductions. Many programs even allow you to scan your tax receipts in for safe keeping.

We no longer use the program, due to my husband wanting to help with the financial management. He is uncomfortable with computers. So we keep log books instead. The key to tracking your expenses isn’t necessarily to write down everything you spend when you spend it. It is to ask for and keep all of your receipts for things. If you don’t get a receipt, you’ll have to write it down.

So either way, take the time to add up all of those spending categories. For example, a daily cup of coffee can cost you $547 a year. If you smoke two packs of cigarettes a day, you are spending approximately $3000 a year. If you eat your lunch out every day, you could spend around $2,600 a year. Three drinks after work once a week can add up to $1092.

Cut all those things out and you could save over $7000 a year. That’s a lot of money. Did you know that coffee, cigarettes, lunch and drinks were costing you that much money?

By budgeting and tracking your spending, you are able to see the areas you can cut back on. You may find that you don’t have to sacrifice very much to achieve your goals. After all, what is more important, putting $7000 a year into your retirement savings or keeping up with your current spending habits?

Being on a budget sounds about as fun as being on a diet. The definition of a budget is an estimate, often itemized, of expected income and expense for a given period in the future. The definition of a diet is food and drink considered in terms of its qualities, composition, and its effects on health. Boring, who wants to sign up? But both budgets and diets have gotten a bad rap. Below are ten reasons to be on a budget. Surely one or two will resonate with you. Take some time to set up a budget for the new year and enjoy the benefits!

10. A budget shows all your sources of income. This includes jobs, tips, bonuses and child support. The first thing any budgeter will tell you is you have to know what is coming in. Gather your sources of income and list them. Add them up. You may be surprise at the amount you have coming in each month.

9. All your expenditures are listed. How much are you spending each month? This includes cash, check and credit card charges. Gather all your expenditures. Do not forget those periodic costs that you pay quarterly or yearly. List these on the same page that you have your sources of income. Add these up. You are doing great if you have a positive number left!

8. Create a plan to reduce and eliminate debt. If you do find that your expenditures are more than your income, that’s ok. Now you know how much and can create a plan. You can contact those you owe and let them know your plan. They may be able to help you reduce your debt faster.

7. Categories let you know how much you to spend on necessities. Group your expenses by category. Put your household items together, put car and other modes of transportation in another, be sure to have a category for medical, savings and entertainment as well. Divide up your income across these categories. Don’t spend more money than you have in the category.

6. Balance your debt reduction plan with an entertainment/fun category for you and your kids, to chillax. As you pay down your debt, don’t put your life on hold. You may have to find some creative ways to have fun is you have a lot of debt. Approach it in a way that makes the challenge fun. For instance, take a 5 or 10 dollar bill and ask your kids how many different ways they can come up with for the family to have fun on this amount of money. Write them down and then make plans to do them. There also lots of events around town that have no cost at all. You will find them if you look.

5. Savings plan for unexpected events and/or big items like cars, house and trips. Now that you have a budget, you can set money aside for bigger things. Nobody ever plans for accidents or illness, but they do happen. So know that the savings category is for these events. Just in case. Then there are down payments for a home or a new car. Or car repair. You can use this category for trips if you like to travel.

4. Plan for the future, put money aside for 401K, and or IRA’s. The cost of living goes up as you get older. Make sure you have a category for when you want to slow down and enjoy a bit. If you have an employer who matches your contributions, take advantage of this benefit. Otherwise, it’s like leaving money on the table. The sooner you set this up in your budget, the longer the money has to grow. Teach your children to do this as soon as they start earning money.

3. Have money for college and other big dreams. Do you want your kids to go to college? Do you want to go to college? What dreams do you have you thought were impossible to achieve? Now that you have a budget, you can put a category for your dreams. It might take a bit but isn’t later better than never?

2. Creates an environment to allow for more choices. Being on a budget allows you to be ready for opportunities as they arise. A lot of people are in a financial bind right now. But not everyone. Those who have been on a budget, are able to pick up some great bargains right now. Wouldn’t you like to be one of those people?

And the number 1 reason to have a budget is…

1. Peace of mind. Don’t you and your family deserve it? Knowing that you’ve created a plan and are following it, will let you sleep at night. You won’t have to worry about if you have enough. You know you do.

It’s that time of year when we look at our bank statements and declare “This year will be different, I will commit to a weekly budget planner in the New Year and start changing my spending habits!” Unfortunately whilst many of us make new years resolutions, most of us have broken them by the end of February, but if taking better control of your finances in 2010 really is a resolution you would like to keep, then one evening in January (or any time of the year for that matter) is all it takes to really grab that budget by the horns so that maintaining that feeling of financial motivation becomes almost second nature throughout the coming year.

To get started you will need to sit down with a pen and notebook.

Begin by getting out all your old bills from 2009 and get a feel for your typical spending habits. It’s easy to see that a large portion of your income is going to be taken up by rent or mortgage payments, and in today’s economic climate that is unlikely to change. However, other areas can be tightened up; for example, the phone and power bills can often be reduced by choosing different plans, using power more efficiently etc.

Don’t feel disheartened by the fact that probably 80% of your income is taken up by the necessities in life like a roof over your head, food, heating, gas etc. This is normal, modern day life requires a lot of expense, but it doesn’t mean you can’t enjoy life too. So realistically consider the things you enjoy in life and be committed to allowing for entertainment expenses. In short, a happy budgeter is a better budgeter.

If being an organized budgeter has not been one of your strengths in life chances are you have not kept receipts to review spending in areas such a feeding your shoe addiction, keeping your home stylish, eating out, going to the movies and other ‘luxuries’ in life. Indeed we should all have the ability to distinguish between need’s and wants, but in order to set a realistic budget we must also accept that we will have wants, so identify them and include those spends in your budget for the coming year.

In one column on your note paper make a list of all your regular commitments, your rent or mortgage being the first.

Continue the list with all your regular bills, phone, internet, power, cable TV etc and write down the amount they usually are in a column alongside, some will be fixed whilst other may fluctuate depending on use, so just write down an estimated amount. Don’t forget things like insurances and school fees, and of course loans.

Now break these figures down to fit in with your income cycle, so for example if you receive your power bill every 3 months, but get paid every fortnight, then you will divide the bill by 6 and this will tell you how much out of your fortnightly income needs to be set aside for an expense. Looking at it this way means you will begin to think of your power bill as a $40 expense each pay, rather than a bill that is coming sometime down the track.

Now go back to the column where you have listed your bills and begin adding other things that are common spends for you according to your own unique lifestyle. Perhaps you drink coffee on the way to work everyday, that $3 coffee could mean a $21 commitment out of your pay cheque. You might be a regular lotto player, buy a weekly magazine, the daily paper. All these seemingly insignificant spends could add up to quite a bit as you are trying to keep a hold on your budget while wondering where all the money goes. The trick to being in control is a simple as being honest and realistic within reason allow yourself these simple pleasures.

Now we come to identifying our wants, for example, clothing is a necessity but most clothing purchases are actually not, again, there is nothing wrong with having a love for fashion, just acknowledge it and plan for it. Perhaps consider the time you are most likely to spend up on clothing, during the end of financial year sales perhaps, or at the beginning of each new fashion season. By understanding your normal spending patterns you will be in a much better position to make wiser choices when it comes to buying the things you want and by the end of the evening you should have a very clear idea of your personal spending habits and be ready to commit to a new financial you in 2010.

Now that you have a handle on your normal spending habits you should also consider setting aside a little each week for unexpected emergencies, and of course having a savings plan is always a good idea, but if you are in debt, focus on paying down that debt before worrying about savings.