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Do you get to the end of each month and realize you have more month than paycheck? Does the idea of a budget make your skin crawl? Do you know that you’re spending more than you earn, but feel overwhelmed?
I’ve been there. In fact, I still have moments when I have money issues, but I’ve gotten a lot better with my money over the past few years. I am a firm believer that a healthy life is not just about food and exercise. If you are stressed out, or depressed, you are not living a truly healthy lifestyle. The good news, is you can adjust, and just like learning to balance your food and exercise, you can balance your budget! Here’s how you start to get a handle on your spending.
Step 1: Write Out Your Absolute Needs
- This means the bills you MUST pay or you will lose your house, your car, your utilities etc. To do this, make a list of the necessities. What is your rent or mortgage every month? How much is your electric bill? Keep in mind when you’re doing this that there is a difference between NEED and WANT. Do you really NEED cable television? In this step, I would leave out anything that is actually a luxury and not a bare bones necessity. I’ll explain why later.
Step 2:Â Track Your Spending
- When I say track your spending, I mean ALL your spending, for at least a month. Any money that goes in our out of your hands/bank account/wallet/pocket. If you find it easier to keep track by writing it out by hand, do that. If you like to use a spreadsheet, do that. I have used mint.com and found it very useful to help me not only track spending but various categories of spending.
When the month is over, take a look at your spending trends. Discovering where exactly your money is going each month will really help you get a handle on where you can cut back. Where is it you are overspending? Are there any big surprises? I know when I looked at how much I was spending on lunch out every day, I got a big shock. It wasn’t pretty.
Step 3: Assess and Reassess
- Take the biggest surprises from your tracked spending and do some research. Are you paying a lot for your cell phone or cable television? Shop around, see if you can find a better deal and go for it. A great resource is billshrink.com. Don’t be afraid to ask friends if they were able to get a great deal on their cable or cell phones. If you discover that you can’t find a better deal on cable, consider going without until you’re a little more financially stable. There are a lot of other options for TV and movies, like Netflix, Hulu, or the public library. You may even discover you don’t watch as much television as you thought.  Also, if you’re able to cut an expense like that in order to save more, you can always go back to cable.
I tend to spend a fair amount on books, so I started seeking out friends to borrow from. I also recently read about cash4books.net. I haven’t used it myself, yet, but I intend to. I have a really hard time giving up my books because I do go back and re-read frequently, but I don’t re-read every book, so it’s time to let go. Another way to get your book fix is again through your local library, or yard sales.
Is the interest rate on your credit card making your minimum payments impossible? Do you have several cards with overwhelming minimum balances? Call your credit card company, and ask them to lower the minimum payment or the interest rate. If they say no, find a card with 0% interest rate on a balance transfer and move your debt over. I also found consolidating debt to be very helpful and less stressful. Having the 0% interest will make paying the card off a little easier.  I made a switch to Chase and have found the Blueprint function really helpful in managing my payments in a realistic manner.
Step 4: Budget
- Put your needs first, and make sure you set aside that amount of money before paying out to your wants. There are several schools of thought on budgeting but the main point is that you need to spend less than you earn. We’re lucky that we live in a time where there are a lot of budget tools available online, some on mint.com, msn.com, and other websites. The reality is you need to find what works for you. No budget is one size fits all. If using an envelope system for cash is easier for you to keep track of your spending do that.  Don’t forget to budget for fun! You may have to cut back on some things, but don’t totally deprive yourself. You will certainly set yourself up for failure if you attempt to turn into a hermit when you’re a very social butterfly.
Step 5: Real Life and Temptation
- It’s hard to be on a budget sometimes. Especially when your friends are doing all kinds of fun things that you maybe can’t really afford to participate in . Knowing this is temporary helps. I’ve also started living by the “Do I Really Need This?” rule. This means, when I go shopping (or, like when I was at Disneyland this past weekend,) if I find an item I really like, I assess the actual value. Not the dollar amount but the “how often will I use/wear/read/listen/watch this?” value. What is the quality of the item? Will it be replacing an item I let go? Example: at Disneyland I decided I would allow myself ONE fun item. I really wanted a mug with my favorite character, Maleifcent on it. They don’t make such mugs, so I was out of luck. However, I did find a Captain Eo t-shirt, and I decided to get that as my one item. I rationalized that I would wear it frequently, and it was my one item. Was it disappointing when I later discovered the adorable Chershire Cat mug in the Emporium on Main Street? Not really. I don’t use mugs all that often anyway truthfully. I do however, wear t-shirts often.
Don’t be too hard on yourself. Changing habits is challenging. We live in a very immediate gratification, consumer driven society, and turning around spending doesn’t happen overnight. Commit to changing, but cut yourself some slack if you slip up.
I also signed up for the Daily Worth mailing list. I enjoy reading the articles, and find them easy to understand and empowering. In addition to that mailing list, I follow several financial and consumer blogs in my google reader.
Five Cent Nickle
Get Rich Slowly
The Simple Dollar
Free Money Finance
What is your money saving/budgeting strategy?
 Anyway, after reading through the article I’m thinking about scheduling a meeting with a 
