Budgeting Freedom

Budgeting – Go deeper

Refining your budgeting is what you will want to do after you have begun to master your budget. If you haven’t already done so, please read Starting A Budget before this article. Our goal here isn’t to make you so restricted that life is no longer enjoyable. The goal is to look at places where you spend money that could be better used as savings – better budgeting.

Let’s Start at the top with Income

One of the great things about listing your income is to see where you may be able to add to it. After we get finished with this budget you will understand that even a small amount of extra income can dramatically increase your savings.  Maybe, you are currently saving $100 – $200 per month because that is what you have after all your expenses are paid. This may not seem like a lot but it is more than many save. So, let’s try to build on it with a little extra income and savings on expenses.

You will find it that maybe working one or two nights a week extra or an occasional Saturday may help you double or triple what you’re saving each month. Saving $400 per month can, over time be life changing. Budgeting for steady savings early in life savings lead to enormous sums 20, 30 or 40 years later.

Other forms of income that many can budget for are Real Estate rental income, dividends, stock appreciation and interest income.

Learn a new Skill

Perhaps having an even greater impact on your financial future is using some of your free time to gain new skills, earn or finish a degree, staying late off the clock at work, or investing time working on improving your finances. Nothing is better than increasing your income potential to boast your ability to save. Invest in yourself, it is always the best investment you can make. Start if even slow but learn how to increase your value to those who are paying you.

Start a side hustle

Lot’s of people have a skill that they can offer to others after hours or on weekends. Working one evening a week for $50 would give you $200 more per month to save. You might babysit or do accounting. Maybe you drive for Uber or rent out a room through AirBnB. Some people comb garage and Estate sales for treasures they can sell on eBay. Getting even the smallest side-hustle going can also fuel larger investments like buying a rental property. If you are currently in a fair amount of debt you will need to do even more. Nothing cures a tight budget as some additional monthly income.

Budgeting to reduce expenses.

For many people, expenses are where the budget falls apart. Most people do some overspending and expenses tend to creep over-time. You can reduce your discretionary spending, just don’t buy it, don’t spend it! Monthly expenses don’t creep down, they generally creep up.

So, you have already listed all your housing, utility, food and other regular recurring monthly payments. Now go back in and look and see from your records if your cable bill, cellphone, and food bills have crept up. You may have slipped into eating out a lot or buying expensive coffees. Now your budget is no longer working the way it was two or three years ago. If you’ve been running things really tight you may have already tried to reduce these bills as much as possible. However, if you have not and you see that they have crept up now is a good time to look at these expenses. Work line by line and see how they might be reduced.

Slash Expenses Wherever Possible

Work on just one or 2 per week until you have tried to reduce all of your expenses. The phone call to your cable company will almost always result in a lower monthly bill. Likewise, cell phone plans change, and you may be paying for things you don’t need. Look at every expense and make an effort to reduce every single one you can. After you look at your budget, you’ll know exactly why your parents used to tell you to turn the lights off!  So, keep the door closed when the weather is bad outside. Do not to make unnecessary trips in your car uptown. Stop eating out several times each month. Even things like expensive coffees add up and you might consider bringing lunch to work. Even carpooling and shopping in secondhand stores can all reduce your outlays.

What to do with the money you trim from your Good Budgeting?

You order of importance should be:

  • Pay down any high interest debt. Paying off debt will also free up more money for savings.
  • Full contributing to your company 401K or 403B plan to take full advantage of any company matching.
  • Start an investment account with automatic withdrawals from your checking account.

You are now well on your way to good money management, working on the issues and you will see the progress!