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A budget
could help you crush your outstanding debt, take charge of your financial
future and even become a happier, more relaxed person. Depending on your
circumstances, a proper budget may not require that you spend less. Instead,
you may simply have to make more effective financial decisions.
Stick to your budget and don’t overspend.
This is the first rule of budgeting, and pretty much the only one. It sounds
fairly obvious, but it's easy to go over budget, even when you have one in
place. Be mindful of your spending habits and what your money is going towards.
Try to reduce your expenses.
Larger expenses can be the most unpleasant but most effective ways to stay
within a budget. If you take an annual vacation, consider staying home this
year. Smaller expenses can also add up.
- Try to identify and cut back on any expensive luxuries you enjoy. If you enjoy a weekly massage or have a preference for expensive wine, cut down on the frequency of these treats so you’re spending money on them only once a month or once every second month.
- Save money on smaller expenses by switching to generic brands and eating home more often. Try not to go out to eat more than one or two times every week.
- See if you can reduce any of your fixed expenses by switching to a less expensive cell phone plan, reducing your television package, or improving your home’s energy efficiency.
Treat yourself periodically, but within reason.
Your money has to work for you, not the other way around. You don’t want to
feel like a slave to your budget, or to money in general, so it’s important to
allow yourself a small treat every month that won’t break your budget.
- Don't abuse your own rewards system to the point where it gets counterproductive and ends up affecting your budget. The idea is to treat yourself to smaller, cheaper items like a latte or a new shirt and to avoid splurging on more expensive items like a vacation or a pricey pair of shoes.
Pay off credit card balances every month.
If you use credit cards, you should try to keep them at a zero balance every
month to avoid costly fees. If you cannot pay off the current balances,
prioritize paying them off within a reasonable time period so that you can get
to zero balances.
- Try switching to cash payments for most weekly purchases—particularly “extras” like eating out or coffee shop lattes. This can help you control your spending, as people are more aware of the money they’re spending when using cash than when swiping a card.
Cut your taxes.
Take better advantage of itemized deductions when you file your taxes every
year.
- Start keeping your receipts, especially if you're an independent contractor and work from home or remotely. There are many amenities you can expense as part of your contract work when doing your taxes.
- It’s a good idea to research ways to get a better tax refund as a contractor or ask your accountant how you can get a better refund.
Appeal your home assessment.
If you're a homeowner and have sufficient evidence, you might be able to cut
your real estate taxes by challenging the value that a home assessor puts on
your property.
Don't count on windfalls. Don't
factor in potential (unsure) sources of revenue, such as year-end bonuses,
inheritances, or tax refunds. You only want to include guaranteed money in your
budget.
Finance
