Finances are the leading cause of stress in a relationship, according to a survey by SunTrust Bank. So, a big part of maintaining a happy household is properly balancing your budget. You need to make sure you’re spending less than you earn, which allows you to pay all your bills while saving up for future emergencies. This can be challenging in the best of times, but it becomes especially difficult when money is tight. Here are four tips to keep in mind as you do your best to manage your budget.
Track Your Monthly Earnings
Before you know how much you can afford to spend, you need to know how much you’re making. Use a budgeting app, digital spreadsheet, or pen and paper to note down all your sources of income. These could include your principal employment, the returns on any investments, government assistance, and profits from side hustles. Once you’ve added all these sources of income together, you’ll understand how much you can count on every month.
Write Down Your Expenses
Once you’ve determined how much you’re earning, it’s time to figure out how much you spend. The only way to do this is by writing down everything you spend money on over the course of the month. This includes major, recurring expenses like utilities, mortgages, and health insurance, as well as smaller daily spending. No latte or scratch ticket is too small to be worth recording. This can be difficult if you spend cash for everything so you might want to find an App to help you track everything. Forbes Advisor published an article on the Best Financial Apps to help you choose the one that is best for you. If you put EVERYTHING on a credit or debit card it is easy to look at your statements to find this information very quickly. If you use a combination of cards and cash you will have to track the cash expenditures.
There is nothing inherently wrong with using debit or credit cards as long as you have the self-discipline to pay them off IN FULL… EVERY MONTH. But as the video above shows, some people have difficulty doing that and for them, the cash envelope method may work better.
Identify Areas Where You Could Cut Spending
Once you’ve got your expenses laid out in front of you, you need to determine how much spending you need to cut in order to achieve your budgeting goals. If you earn $2,000 a month and are hoping to save 25% of that income, then you’ll need to find a way to bring your monthly spending down to $1,500. Use your list to identify costs that you could reasonably do away with.
Plan for Major Expenses in Advance
Instead of letting sudden expenses catch you by surprise, try to plan for home improvement projects, trips, and elective medical procedures in advance. After all, appliances like dishwashers and water heaters only last between 6 and 12 years anymore. Tires last 40 or 50,000 miles. Residential roofers, say that the average roof these days lasts about 20 to 30 years. Knowing that these types of expenses are going to happen, you need to make sure you account for the coming expense in your budget.
Maintaining a healthy budget, even when times are tough, is essential to keeping your household happy and financially secure. If you fail to take the steps mentioned above, you could quickly find yourself in financial hot water. Diligently balancing your budget, on the other hand, will give you greater financial flexibility down the road.
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