So you’ve decided to step up your game and focus on budgeting, saving money, and getting your finances in order? Good for you! It’s never too late to get started, and budgeting is not as hard as you might think. There are plenty of programs, mobile applications, and online tools that can help you become a better budgeter while putting money away into savings during the process.
Let’s take a look at a few tips that can help you budget and save money in 2014, and beyond.
Tips for Saving Money
Get Your Spending Under Control
The first step to putting your resolution into action is to get your spending under control. Think about all the unnecessary expenses you make on a daily and weekly basis. If you’re constantly spending money on coffee, going out to eat, and buying things that you don’t urgently need, sit down and add up exactly how much you’re spending and where it’s going. Take a look through your bank account and credit card statements and current savings account balances. Find out where you can save money and try to change your behavior. Pack lunches, make coffee at home, and start saving for big purchases instead of spending money you don’t have.
Pay Down Your Debt
If your goal is to get out of debt, stop using your credit cards as much as possible. Find out how long it will take you to pay off your current balances by making more than the minimum payments, and pay down any debts if you have the money to spare. You’ll end up saving more in the long run in interest charges and late payment fees. When you make purchases, use cash or funds your bank account instead of turning to credit cards or loans.
Set Up a Budget
If you want your goal to be effective, you’ll need to come up with a budget – and stick to it. Determine how much you make on a weekly, bi-weekly, or monthly basis, and compare your income to your expenses. If you’re spending more than you’re making, it’s time to cut back. Downgrade your cable TV packages, get rid of any unnecessary expenses, and total the amount of money you spend on living expenses like rent, utilities, car payments, and credit card payments.
Once you know exactly how much you’re making and what you spend on your monthly expenses, calculate how much you can afford to put into savings, and how much disposable income you have to spend on entertainment. Set a weekly allowance for spending your disposable income, and withdraw cash to spend instead of using your debit cards. Once you run out of cash, you’ll have to wait until the following week to spend anything else on unnecessary expenses.
Track Your Spending With Software
Home budgeting software can help you keep track of your bank account balances, credit card and loan payments, investment balances, and savings. Most software automatically integrates into your online accounts, so you’ll know exactly what payments are due and how much cash you have on hand at any given time. Using home budgeting software can help you save money on late fees by sending you reminders when bills are due, and by allowing you to set up automatic payments so you never miss another due date.
Check Your Credit Report
It’s a good time to check out your credit report to make sure everything is correct and up to date. This also gives you the opportunity to dispute any inconsistencies within your credit report. Knowing your credit score will make it much easier to take out a loan, buy a new car, or sign up for new services.
If you’re expecting a tax refund this year, pay down debt or put it into your savings account instead of spending it.
If you don’t already have a savings account, IRA, or 401k, now is the time to consider opening one. Now that you know your monthly expenses and income, you should be able to calculate approximately how much money you can put away with each paycheck. Deposit the money into a savings account automatically, open an IRA with automatic deductions every time you get paid, or speak with your employer about joining an employer-sponsored 401k plan.
The more money you can put away now, the better off you’ll be in the future when you retire, buy a home, or run into unexpected expenses like medical bills, auto repairs, or major home renovations or emergencies.
Getting your finances in order is a great goal. Control your spending, pay off your debt, set a household budget, and put as much money into savings as you possibly can. Your wallet (and family) will thank you in the future.
written by: Brian Flax
Brian Flax is a freelance writer based out of the Washington, D.C., area. He is experienced in a variety of topics, including education, technology, and finance management.