The beginning of the month is glorious – the wallet is brimming with crisp notes, the smiles are wide, and the long shopping list is ready. After paying dozens of bills and splurging, the smiles melt into furrowed brows and sullen expressions. The wallet is almost empty, and the next paycheck will take a while to arrive. For spendthrifts like me, managing expenses is a disaster and setting a budget is impossible. On the other hand, my husband leads a very balanced lifestyle and is a money-saver.For spendthrifts, managing expenses is a disaster and setting a budget is impossible. Click To Tweet
After having a baby, my husband and I decided to be wise with money. It meant no more splashing out whenever we had an urge! During an extremely grilling budgeting session, we noticed that we go overboard every month.
It was easy to get carried away when Kate Spade was having a grand sale but pushing the boat out had its side-effects. We were beginning to feel the pinch. It was high time we did something about keeping our finances in check.
Here are the following tips that effectively helped us manage our monthly budget. Check them out!
1. Where Does All the Money Go?
First step is to track your incoming and outgoing money. Outgoing money is mostly divided into fixed costs, variable costs, and indulgences. Monthly grocery, utilities and bills, mortgages, taxes, petrol, kids’ fees, and other similar expenses take a big chunk out of your pocket. The rest of it is spent on luxuries and little is left to save.
Take each little expense into account and track your monthly expenditure. Divide your expenses into different groups: necessities, luxury, loans, and savings. Calculate how much money you tend to spend on each group every month and whether there is a way for you to cut down.Do you know where your money actually goes? Click To Tweet
2. Set Your Financial Goals
We have heard the phrase ‘save for the rainy day’ numerous times, and that’s what we usually do. We keep some money aside for emergencies and become lenient with our expenditure. That’s where having priorities can help us save money. Ask yourself about your short-term and long-term goals and give yourself an estimated period to accomplish them. If you have built an emergency fund, check if you have accumulated enough money to cover expenses of at least 6 months. Moreover, if you have any debts, try to pay them off as quickly as you can.
Ask yourself a few questions. Do you need to buy a new car, lease a house, or make a down payment? Perhaps you want to take a summer vacation this year. Wouldn’t that be simply splendid? When you have big goals, you readily work for them.
3. Involve Family Members
From spendthrifts to cheapskates, every person has a different attitude to money. I won’t call my husband a miser, because he isn’t one, but he spends each penny tactfully. Then there’s me who happily go on a spending spree and come back with a huge credit card bill. When we were trying to set up a savings account for our child, my husband clearly told me that we would have to be on the same page. Otherwise, it wouldn’t work. He was correct! Since that day, we discuss before making a hefty purchase or investing somewhere. While planning a budget, it is important to discuss it with the whole family. The ‘money talk’ can be very stressful and unpleasant, but at least there will be no surprises when the credit card bill arrives!For a budget to work, family members must be on the same page! Click To Tweet
4. Be Smart, Save First
For savings, set a specific amount to save every month and stick to it! Rather than saving a few bucks at the end of the money, do it as soon as you receive your wages. Most people, including me, feel wonderful when money comes their way. Their hands itch to buy lavish bags, fur coats and a new center table. Don’t fall into the temptation.
When you receive your pay, deposit a certain amount into your savings account and forget about it until there is a real financial emergency. Furthermore, if you struggle to save, consider automatic withdrawal. For instance, you can set up an automatic withdrawal of 10% of your income from your checking account to your savings account every month.If you struggle to save, consider automatic withdrawal for savings. Click To Tweet
5. Allocate a Personal Allowance
Admit it or not, a large lump sum of money is spent on non-necessities. We overspend on clothes, accessories, gadgets, entertainment, and dining out. It would be unseasonable to promise yourself that you won’t indulge at all. It is highly unlikely that it will work.
Each month, give yourself a personal allowance and spend within that limit. Yes, just like good old days when your parents were the one to shell out pocket money and you didn’t have to worry about the rent! At the same time, bring your indulgences under control and closely monitor the purchases. There is no need to go to every single sale!
6. Use a Monthly Budget PlannerUse a budget planner for effective financial plan! Click To Tweet
From car insurance to coffee jars, make a spreadsheet on your personal computer to keep a track of your spendings. List down all the possible sources of monthly income and expenses. If there are multiple earning members in the house, you can either combine or use separate ones. After a few months, you will notice a pattern and how the expenses differ every month.
Going through budget worksheets will help you realize where you tend to splurge or how much is spent in an unanticipated expense such as car repair or a medical bill. Each family member can have a look to get an idea on how the household runs. In my case, a budget worksheet is keeping me organized and my lavish indulgences limited. If you don’t want to use the spreadsheet, you can use any notebook!
7. Are You Making Enough Money?
What should be your approach when you realize that your income is not sufficient? When we make a budget, we focus on cutting down expenses. Sadly, sometimes our wages can hardly make ends meet, let alone enjoy any frill. In such cases, be realistic and try to find ways to bring in more cash. Ask a family member to chip in, work online, rent out a room, freelance or if possible, find a better job.
8. Control Your Impulses
Thanks to credit cards and online shopping, it has become easier to give into your desires. I can’t tell you the number of times I have bought something entirely useless out of impulse. There was regret the very next moment. When you see a shirt at Zara you think you can really flaunt at work, give yourself a week. You will notice the urge passes away with time. Another great tip is to compare the price of the item with hours of work.
9. Plan Your Meals
If you feel you are overspending on grocery, try to make weekly plans for meals. Oftentimes we go to the supermarket, load our carts with little temptations that we hardly use. We may buy packets of quinoa that we don’t intend on making anytime soon. Ultimately, it is a waste of money. Try out the weekly strategy for a month and see if there is any change. Buy only those ingredients for the food you are planning to make the coming week. I have tried it out and we saved about $160 a month.
10. Change is Inevitable
Before we had our child, our life was all about quick meals, work, and fun weekends. We didn’t really care whether the stairs were too steep or if there were enough fruits on the table. After the baby, one of us had to quit work so that was quite a blow to our monthly budget and of course, baby brings its own set of expenses. From childproofing our entire house to buying infant equipment, our budget went haywire. Within a few months, it settled, and we got used to our new routine.Remember that your budget won't stay the same forever. Modify accordingly! Click To Tweet
Remember that your budget won’t stay the same forever. With time, changes will occur that will influence your expenses. For example, getting married or having a child will increase the monthly budget. You must adjust the budget accordingly. After every few months, revisit the budget to see if any modifications are needed, or where it can be controlled.