Items you will need
- Three sheets of paper
- A calculator
- Last three months of bills and bank statements
Do you ever find yourself wondering where you spent all your paycheck? You are not alone. For so many of us, it seems that no matter how much we make we still don't have enough money left at the end of the month to put away toward our retirement, emergency savings or even a well deserved vacation. This article will teach you how to finally break that viscous cycle, budget your money and save.
Using the information from your monthly bills and bank statements, make a list of all of your monthly fixed expenses. Fixed expenses include your utility costs, rent or mortgage payment and food costs. These should be items that you need; not those items that you can do without like your cable television bill.
On a second piece of paper, make a list of your debts including how much you owe, what your interest rate is for each debt and how much you pay per month. This list should include your monthly car payment even though most people would consider this to be a fixed expense. Instead, the amount you spend per month on gas and car maintenance should be listed under fixed expenses.
On a third sheet of paper, make a list of all of your monthly extras. This is how much money you spend on entertainment, beauty products and treatments and all of those items you splurge on every month that are not necessities. Think carefully about this list and make sure you don't overlook anything like the cost of your weekly outings with friends.
Add up all of the items from the three lists and subtract this total from your monthly salary. The results may surprise you. You may even discover that you spend more every month than you actually make. The bad news is that you'll have to work hard to change your spending habits. The good news is that you now have the information you need to begin fixing the problem.
Look carefully at each list. Are there any expenses that you can cut back on or completely do away with? For example, most people are surprised to see how much they spend on going out to lunch every day as this can easily add up. By figuring out how much you are spending on this, you can easily start cutting back on how much you are spending. Start by packing your own lunch or buying frozen lunches. If the majority of your salary is going toward paying off debt, you may be able to call your credit card company and get them to lower your interest rate. You can also look into consolidating your debts or refinancing your car loan for a lower rate.
Make the necessary adjustments to your monthly budget and start seeing your monthly savings increase. Remember to put your savings aside for emergencies and invest the rest in your retirement and that family vacation you've been dreaming of. Also, don't just put these savings in a regular savings account. You can get a higher return on your money by opening a CD, money market account or IRA. It is important to consider all of your options. Once you get started, you may even have fun thinking of new ways to reduce your monthly expenses and increase your savings.