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4 Tips for Managing Your Budget

By Blanche Thomas

Whether you're saving for a wedding, a purchase of a new car, a down payment on a house, or to finance a family vacation, you can certainly go the old route of putting your loose change in a piggy bank. But for a bigger payoff, here are 4 effective tips to help you save money:

1. Put it in writing:

One of the main reasons we typically overspend is because we don't always know how much we can afford. Buying has become as easy as swiping one of several credit or debit cards, and we usually don't even realize how much damage has been done until we happen to take a look at an account statement.

TIP: Keep record of all your finances in a spreadsheet, and update it regularly with details of your monthly income, cost of living, and routine bill payments. Doing so will allow you to determine an objective amount of extra spending money you are actually able to afford. By organizing all of your finances in this way where it is viewable in one place and is regularly updated, you will be obligated to prioritize your spending, making it less likely that you will make an excessive purchase.

2. Cash only:

Speaking of credit and debit cards, anytime you are spending by either method there is always a risk of overspending regardless of if you've pre-planned your finances in writing, simply due to the fact that paying by credit or debit are the fastest and most convenient ways to pay for purchases.

TIP: If you are truly serious about managing your budget, try leaving your credit and debit cards at home every now and then when you're not planning to use them for a specific reason, and carry only a limited amount of cash in your wallet for emergencies. This will naturally prevent you from making random impulse buys that you don't need; with your credit/debit cards no longer so easily accessible, you'll be forced to reconsider all of your discretionary purchases and instead plan ahead for the necessary ones. Just remember to keep all of your receipts!

3. Develop a strategy:

When managing your budget, there is always some end goal to strive towards, whether it is to pay for a wedding, purchase a new car, make a down payment on a house, or to finance a large family vacation. The most effective way to make sure you achieve your end goal is to develop a strategy so that your savings plan is manageable, and so that you're not unnecessarily burdening yourself with too many restrictions on spending.

TIP: Set a dollar amount as your savings goal and determine a timeline over which you would like to achieve that savings goal. For instance, I want to save at least $5,000 to contribute to a down payment on a house within the next 12 months. Then, divide your savings goal amount by the amount of weeks in your given timeline, and you will have the amount of dollars per week you should be aiming to save: there are about 52 weeks in 12 months, so if I divide $5,000 by 52 weeks, I should be aiming to save about $96 per week over the year in order to reach my goal. Adjust this strategy to accommodate your savings plan to maximize your chance of success.

4. Spend smart:

Successfully saving money requires sacrifice, but there are some expenses outside of bills and rent that I like to call "flexible essentials" that I know I cannot live without, but are types of expenses that can definitely use some defining. My flexible essentials include grocery expenses, dining out expenses, and gym membership/fitness expenses.

TIP: You don't have to sacrifice it all. Take advantage of all the resources you have available to you, and spend your money only in ways that are cost effective.

For grocery expenses, try investing in a wholesale grocery membership (i.e., BJ's, Costco, or Sam's Club), and buy staple food and household items in bulk. A yearly membership often pays for itself within a few visits, and you can save an average of 15-25% off your grocery expenses. For dining out, try to limit your trips to once or twice a month, and perhaps opt for a lunch or brunch meal rather than a fancy dinner. Lunch is always priced lower than dinner at restaurants, and the amount and quantity of food is usually comparable. And for your fitness goals, ditch the expensive gym membership and utilize local parks, running/biking trails, and a workout buddy to satisfy your fitness needs.

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About The Author

Blanche Thomas possesses nearly 15 years of experience in the real estate world. As a...

Phone: 508-685-2434

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