Is it Time for a Full Review of Your Expenses?
If you’re a budgeting king or queen, and the inner nerd in you comes out daily, you might think you have everything under control; especially if, for example, you’ve been budgeting for a number of years. It’s easy to become comfortable and complacent when you have a system that seems to be working.
But you might be surprised to find out your lifestyle probably has inflated to a certain degree over the years. Through small changes, a few budgeting categories might have crept up on you.
How To Review Your Expenses
Here are a few ideas on how you can do a full review of your expenses and find some ways to save money!
Method 1: Calculate the amount of your actual bills and fund your expense categories appropriately.
This is the best way to find an exact figure for your expenses in several budgeting categories. For example, if you have an insurance category, take the total of all your insurance policies for the year. Divide that amount by 12 months, and place that amount in your insurance budgeting fund. It might be a good idea to pad that fund with some extra money so that if several bills come due at the same time, you won’t be low on cash.
This is a great method as it ensures that you are maximizing every dollar you have. Instead of throwing a high-dollar amount into your insurance fund, you’re being intentional about how much you’re putting in there. And that, friends, will allow you to put the extra money towards other goals like paying off debt or building your emergency fund.
Method 2: Look at historical expenditures and see where you can make cuts.
Look at your checking account and explore some of the areas you spent your money in the past month. Are all of these expenses warranted? Should you have spent the money you have in the past month?
What many people find is that expenses “sneak” into their checking account. You know, the little things like that trip to the taco hut or clothing you bought at the mall. All of these things add up!
Pull Both Methods Together and Compromise
By using both of the above methods in reviewing your expenses, you can create a better budget. A compromise needs to occur between your historical spending and your actual bills. I’m sure you’ll find that your historical spending will be higher (if not significantly higher) than your actual bills. That’s simply because expenses will creep into your budget (after your regular bills) that you didn’t originally intend.
I recommend reviewing these differences with your spouse or accountability partner. They’ll give you great ideas for making the budget work appropriately. They’ll also help you keep track of expenses! Don’t rely on your opinion alone to develop your new spending plan!
Expenses Aren’t the Whole Story . . .
Sometimes, it’s not enough to lower your expenses . . . especially if you’ve been budgeting for a number of years. If you’re a long-time budgeter, you know that you have your expenses down just about as far as they can go. In your case, you need to do something else. Do you know what it is? You need to raise your income!
One of the best ways to raise your income is to get a second or “side” job. There are many opportunities for work out there if you know where to look! Even if you don’t have a college degree, there are jobs for you! Don’t give up. You can do it. Raise your income and you’ll be in the perfect position to create a gap between your income and expenses. With that gap, you can throw extra money toward getting out of debt, building your emergency fund, and more!
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