Simply writing down your current expenses into a log and adding them up does not conclude creating and implementing a budget. It’s likely that you are over-spending in categories and need to change your budget to accommodate your “debt load” (or expenses) or to best approach more ambitious financial goals. Sitting down and taking a hard look at your current situation is only the beginning of budgeting. Once you have written in expenses and seen where you can improve, you must give yourself new “guidelines” for spending in those categories and then the hard part, strictly enforce them. Here are my best suggestions for taking your budget from paper to action.
Negotiate Bills You Thought Were Set In Stone
Go one step further and revisit bills that once seemed set in stone. Can you switch insurance carriers or change your coverage? Adjust your phone plan? Negotiate a better interest rate on your credit card? Talk down your cable/internet package? Or forego a service altogether? Every year in Las Vegas, our rent goes up $60-100.00. After having our first child and my then fiance finishing his master’s degree, I encouraged him to call our apartment’s corporate office and ask them not to raise our rent so we could get through that year, or we’d be forced to find a less expensive place to live. They met us in the middle and only raised our rent by $30.00! If you don’t ask, you won’t receive. The better you are able to confront uncomfortable situations like this, the easier it will become and the more financially secure you’ll be!
Brainstorm A List of Ways You Can Further Save
Where it seems difficult at first to give up luxuries that feel like necessities, you can get excited to “cut the fat”. Make a list of even the smallest ways you can trim down your dollar output. Can you shop at a better-priced grocery store? With additional gas rewards? Can you buy some of your personal care items at the Dollar Tree rather than at Target? Can you go to a less expensive salon? Shop online for some things? Sometimes you have to avoid certain people and places that encourage your unruly spending, and you might need to come up with solutions to put in their place. Saving money is like a muscle that needs exercise to become stronger.
Balance, Balance, Balance
During your “strength training” phase of budgeting, you’ll want to not only track your checkbook expenses, but ALL your expenses. This is the beginning of turning your paper budget into action. You must be held accountable if you’re going to see results from this budgeting effort. Spending is kind of like over-eating without realizing it, but when you log your diet, you’ll be confronted with your choices.
You can create a simple spreadsheet for this purpose with the date, merchant, description of purchase, and payment method.
Your Budget Must Equal Zero
If you’re living with little income or expenses that are largely out of your control, like having dependents, it will take a few weeks or months to make your budget “balance”. The budget in balance means that your expenses and income are equal (0) or your income is more (+). If you have an overage, you can begin thinking about how you can best save or invest that money for a more secure, abundant future.