Let’s review. We’ve now written over 60 articles for our blog in just 2 short months. I feel like it’s been going at a breakneck speed.
The more I write about the subjects of budgeting and saving money, the more I am personally learning about how to put it all together into a comprehensive financial plan that can be used to improve your personal finances.
If you’re visiting us for the first time, here is a recap of how to use budgeting to save money.
Start by organizing your finances. The most efficient way to organize your finances is by creating a checking worksheet that can be used to help with both budgeting and year end taxes. Depending on your financial situation, you should develop a way to keep your money organized. If you do most of your spending in cash then you’ll need to get a tracking app for your phone or do the old fashioned method of writing stuff down in a notepad and saving receipts to help you keep track. If you use a debit card for your spending, it will show up as part of your checking account. Your checking account also holds the information for your income (payroll deposits) as well as your bills paid (through online banking and by checks). That means that your checking account is the key to gathering all of the information you need. The other accounts to organize will be your credit cards (the payments also show up on your checking) and any investment accounts. Once you’ve finished organizing your financial life, it’s time to start using that information to help you save money.
Next, it’s time to create a budget. You can create a budget from scratch, use our free household budget download, or research and find an online budget program to use. There are also other budgeting techniques that may work better for you. These include such methods as using an envelope budget or a bucket budget. When you decide how you’d like to proceed, you’ll want to use the information you organized to populate your spreadsheet or software program. Whatever method you choose, it’s important to take your time and make sure that you’ve accurately entered all of the information required.
Analyze your budget. Once you’ve completed the first month of your budget, start looking at all of the discretionary spending that goes through your accounts. Find out where money can be saved and costs can be reduced. Make sure you continue to use your budget going forward. If you’re using a spreadsheet, you’ll want to create a monthly budget worksheet to help you analyze month to month changes and progress. Watch each category of spending closely to determine if any of your spending habits are getting out of control. Also, make sure you set a goal of saving at least ten percent of your income each month.
Find ways to save money. You can use your budget to look at where the spending seems high. Then, do your research and find ways to lower these costs. If its on discretionary spending like dining out and entertainment, you can probably work toward reducing the costs pretty easy. If the majority of your costs are on monthly bills and expenses that are necessary, you can still find ways to reduce them. For example, you can refinance your mortgage, change insurance providers and such. Sometimes these changes aren’t enough to get your budget on track. In these cases, you should consider making lifestyle changes to save money. These take time but can help you reduce your long term cost structure.
In summary, this is our basic approach to getting your finances back on track, or headed in the right direction for the first time.
Do you have any suggestions as to what helps you save money? Let us know by leaving us a comment. We appreciate your feedback and our visitors do too!