Build a Better Budget for the New Year

Did you overspend last month? Last year? Have you been overspending longer than you can remember?

It seems hard to stay on a budget these days as prices are on the rise. Could you use  a few tips on setting up a budget that works, offers some “breathing room” and allows for savings when those unexpected expenditures pop up?

Know Your Monthly Income

First, you must know your monthly income. If you haven’t begun tracking your income and expenses, now is a good time to start. Next, make a list of all your recurring expenses starting with mortgage, utilities, phone, TV and internet. Add in any other monthly bill such as music or dance lessons, insurance, gas & groceries. It’s a good idea to make allowances for savings and entertainment or eating out. Even if you are only able to add in a small amount each month, it will eventually add up!

Savings

If you are not currently saving, try to make that a number one priority right along with paying bills, the mortgage and buying groceries. Dave Ramsey, one of the nation’s leading economic experts, suggests that all families have at least three month’s worth of savings. That means if your family spends $3000 a month on everything, to be safe and secure, it is recommended that you have $9000 in savings just in case you need it. This may seem like an overwhelming task, but the most important thing is to just begin. It may take quite a bit of time to get your savings up to a number that size but if you don’t start, your money can’t build.

It’s important to still have fun while you are living on a budget and as you try to put some money into savings. Look for frugal ways to have some fun with your family. Take strolls through the park, enjoy a picnic or check out a DVD from the library for a family movie night. It’s important to take time out to rest, relax and enjoy the little things in your life! Constantly working and not taking a break may cause you to become overwhelmed and stressed out.

Debt Free

I’d like to encourage you to focus on paying off debts as quickly as possible, if you have them. When you carry debt, you are paying interest. Even if you have a car that happens to be financed, you are most likely paying for additional insurance. Living within your means may seem like a challenge. You may need to focus on asking yourself if you really need a certain item vs. simply wanting it. Can you save for that special item and eventually pay cash for it? Challenge yourself to spend/save money in a new way in 2013.

Try not to use credit or finance things. Try to wait, save, buy used and pay cash. Living debt-free may be a difficult task at first but the longer you do it, the easier it may become.

Cut Cost When and Wherever Possible

Try to cut costs where ever you can, try these areas first: entertainment, groceries and gas. Is it possible to decrease your minutes on your phone plan? Do you need two cars? Do you need that specific size cable package?

Keep crunching the numbers and try to cut out all unnecessary expenses until you are able to achieve a balanced budget. Challenge yourself to stick to that budget and try to save a little bit more each and every month.

We’d love to hear your budgeting stories! Please tell us about your family, how many members in your household, your financial goals and ways you are able to stay on a certain budget. If you could give one piece of advice concerning budgets, what would it be?

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2 thoughts on “Build a Better Budget for the New Year

  1. We NEVER, NEVER, NEVER use credit cards. Don’t even have one for emergency purposes because I found out years ago that some things that you “think” are emergencies really aren’t….and those finance charges really DO add up! And a word of caution – if just one of the adults in the household don’t comprehend that you will eventually have to pay those bills it affects the whole household! Found that out the hard way, hence the no credit cards in my house!

    Most people don’t realize that you can do things like go to a used tire shop to replace bad tires, while they aren’t new they tend to have a decent amount of tread and only cost about $20 per tire – which includes the mount & balance in most places. Take advantage of places that offer specials on oil changes….better yet – learn to do it yourself. I’m a girl and while I know my fiance will happily do oil changes/change flat tires I STILL insisted on learning just in case! :)

    Something else a lot of people don’t think about…and since I have a LARGE family (8 of us plus pets) I try to save in many ways. I post on Craigslist for freezer burnt meat that I can use to make dog food out of. I also use Craigslist to barter items we have that we don’t want/need/use for items that we are wanting. I haggle with the manager at a few of our local stores (and many are chain stores) for discounts since I shop there so much and spend so much they do tend to be willing to give me little discounts here & there. While it might seem like a lot we added it up the other day and realized that over the past year we had saved up almost $1000 doing this!

    Make sure you also check around in your area to see if there are any discounts or specials for utilities & the like – our city water department offers a 10-15% discount for low income customers, we have a program called PIPP (Percentage of Income Payment Plan) that low income families can be eligible for that will greatly reduce your utility bill each month on electric & gas….some are as low as $5-10/month per service. Also low income families in many areas can get a hugely discounted phone service (AT&T was only $15/month when I used it). While it does not include long distance you can buy calling cards that include quite a bit of minutes for next to nothing. Of course, now that they have Magic Jack you can save tremendously on those pesky phone bills….just make sure you look for special offers to get it in the first place. I got one for less than half price by doing a simple Internet search to locate one. I’m even looking into a “newer” model that my kids say will cover our cell phones while we are at home and help save our minutes on our phones for when we are out & about….still need to look into it more to find out all the details!

    When combining things like this with growing your own garden, canning/freezing, etc. You really can live on a shoe string budget and live well. But if you are someone that likes material “things” you might have to try a bit harder. Although there are some websites out there that you can use to get decent deals on items….ALWAYS (can’t stress this enough) make sure to really look around because even some of those websites don’t have the BEST prices.

    With doing all of these things I have been able to implement a new budget this year which will see us not only buying a house with cash & fixing it with cash, but will enable us to set aside enough money to have at least 6 months of expenses (aiming for more like 12, but trying to be realistic) so that we can follow our dreams of starting up our own business.

    It is amazing the things that are possible when you really set your mind to it.

    Molly says: Thank you for sharing all of your savings/frugal “tidbits.” :)

  2. We pay cash for everything. For our business we can still write some checks. I cut up the only credit card I have ever had four years ago. I use a hand file folder for cash budget each month. I only withdraw cash once a month and that is all I use. I have almost four months of emergency funds set away. We buy used clothing and only new things for birthday/Christmas (we draw one name each), borrow many books for the library, look for cheap DVD’s in the discount bin, no hook up for cable, cut meals out to once a month (do we ever enjoy that meal!), I cut hair, make many meals from scratch, garden, can, and we raise our own beef. I do have to buy learning books new because of the lack of credit cards, but I only buy what is needed. Once in a while I purchase a new book or two for a treat. If an appliance breaks down we buy when it’s on sale. I have a slot in my hand file for those purchases. Regarding our agrarian life; I grew up in the city so I have both sides of the “picture”. I am so incredibly blessed and my heart goes out to those that have to be dependent on others for their food supply. Just to let you know, it takes a long time to prepare everything in canning/harvesting.

    Molly says: That’s great, thank you for sharing. I also think that saving an emergency fund is a wonderful and wise practice!

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