Living on a Budget

By: Emma Snow

Living on a Budget
Living beyond financial means and incurring large amounts of consumer debt are increasing among individuals and families.

  • Whether your income is large or small, creating a budget and adhering to it, will allow you to avoid debt and make better choices about needs and wants.
  • When you create a budget it is not so much the size of your income that determines success, but the way it is spent. The first step is to identify payments and bills and start to allocate your monthly income accordingly. Make categories for each item such as; rent/mortgage, car payment, utilities, food, household items, entertainment, vacation, household repairs, personal spending, savings.

1) Living on a Budget #1
Create Budgets to Fit Your Means

Budgets can be customized to fit individual and family means, as well as needs and wants. You can start by;

  • Identifying where money is being spent.
    Once you do that, you can relook at purchases and identify what expenses can be cut, changed or eliminated. This will allow for more conscience and effective spending.
  • Many people do not realize how much they spend on eating out, unnecessary household items or clothes. The money is gone and they can't account for where it went. This is not only damaging financially by spending more than one has, but it is less fulfilling because it is thoughtless purchasing.
  • For many, immediate gratification in purchasing has led to a plague of debt and bankruptcy. Avoid the trap of interest and wastefulness by making clear decisions about money. Here are some suggestions to help make a successful budget.

2) Living on a Budget #2
Counsel with partner on a regular basis about spending
Regular communication and goal setting allows for financial success because all parties are on the same page and work together to make decisions.

  • By talking about goals it identifies concretely what the needs and wants are for the home and family and helps eliminate the power that impulse can have when shopping. Make decisions together including gifts, eating out, home improvements and personal spending amounts.
  • Setting a limited amount allocated for each person to do with what they want without reporting gives freedom of choice, but controlled. Depending on your financial status that amount will vary and could be as little as $50 a month. It is important to keep it within an amount that can be afforded.

3) Living on a Budget #3
Use it up, wear it out, make it do, or do without

It seems as though the more people have, the more they want. Just getting more money is not the solution for most financial struggles. Learning to evaluate needs and what can last and what needs to be replaced is the first step to putting money in the best places and making what ever your income is, be enough.

  • Although it is tempting to 'keep up with the Jones' ' comparing possessions to others and trying to have what they do will not allow for a successful budget.
  • If items are bought on borrowed money then possessions are not a true reflection of finances anyway. Making due with what one already has will eliminate a lot of unnecessary spending and free up money for more wise purchases.

4) Living on a Budget #4
Give thought to purchases

Mindless spending has a negative of impact on the household as mindless eating does for the body. You end up with more than you need in the wrong places. Plan for what you want by making a list of most important or most desired to least important. Identifying your needs and wants will give focus and direction for spending and help prevent impulse buying.

  • Shop around and see what is out there,
  • what the going rate is for an item, and
  • what a good deal would be.
  • Watch for sales and coupons to make the best purchase.

5) Living on a Budget #5
Include savings in a budget

Living within financial means is not living on the maximum made, but planning for a rainy day. Because unexpected events can and do happen planning for such situations will prevent the debt that would have to be incurred to pay for them. The more a person saves, the better, set aside as much as possible in this area for security and protection. Regret of purchasing is much for common than regret of not purchasing.

Living on a budget will reduce financial stress
.
When you live on a budget, you are making conscience spending choices. A well thought out and followed through budget will create financial freedom and power for individuals and families. Wise choices will increase the quality of life, even if the quantity of possessions is not, and greater peace of mind will be found, and that is success.

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