Creating a Budget You Can Live With and Grow With

It doesn’t ever seem like there’s enough money to do all that is needed. We’ve got a few ideas that will help you stretch your dollar just a bit more.

Here are a few tips for creating a realistic and financially sound budget:

The Basics

1. Get out your bank statements from the past three months, and then…

  • On a piece of paper or on the computer, make two columns. Jot down your monthly income sources in one column, and your monthly expenses in the other column.
  • Distinguish between your fixed (unchanging) expenses – such as rent or mortgage payment, cable TV bill, car payment and minimum credit card bill – and your changing expenses – such as groceries, entertainment and eating out.

2. In the “expense” category, include an amount to save and an amount for unknown expenses.

  • Save about 5 to 10 percent of your monthly income, to go into a savings account.
  • Set up an automatic transfer into your savings account each month.
  • Add a buffer for unknown expenses, such as car or home repairs. Not sure how much money to set aside? Think bigger than you might need. That way, if you don’t spend the entire amount, you can make an extra payment on a credit card, or deposit the money into your savings account, or carry forward the amount to next month.

3. Do the math.

  • Tabulate the total for monthly income and the total for monthly expenses.
  • Subtract the total expenses from the total income.
  • If there’s money left over under “income,” put it in a savings account. Coming up short? Take a good, hard look at where you’re overspending – and start to cut, cut, cut.

Some Ways to Cut Back

  • If you go to the movies, go to matinees. They’re much cheaper than nighttime movies, and a great way to spend time with your family. Remember to take snacks with you, rather than buying expensive snacks at the movie theater. Better yet, rent a film and have a movie night at home.
  • Make several large meals, and use the leftovers during the rest of the week.
  • Use grocery-store coupons, but only buy what you need. Stay away from buying in bulk.
  • Shop at consignment shops and outlet centers for bargains on clothing and home decor items.
  • Instead of buying that expensive mocha frappuccino, search the Internet for a recipe for mocha frappuccino and then make it yourself for a fraction of the cost.

With a good, sound budget in place, you can sleep better at night and start building a nest egg for the future – and set a good example for the kids.

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