As the new year starts, you might be trying to get spending in check to help you manage your money better. You might have been in debt most of the past year that you want to make some positive changes in your finances. There is no better time to do it than at the start of the year. You have a full twelve months to implement any financial changes you think of.
You need to accept that change is something scary for a lot of people. Most consumers do not want to get out of their comfort zones. It is far more convenient to just stay in place and not venture out. However, you will not grow as a person if you stay in the same place your whole life. You need to make changes, especially with your finances.
And when you get spending in check, your overall finances benefits from it. It is much a lot like how you would make changes with your health. The one thing you might always try to do is lose weight. Once you do, you will feel lighter, have more energy, and be able to take up a lot more activities and exercises which will benefit your body.
The same goes with your finances when you try to trim down on your spending. You find that you have more funds at the end of the month. Your debt payments also seems a lot easier since you have more than enough to cover those financial obligations. Budgeting can also be easier with the lower expenses you have. With all these, how do you get spending in check?
Create a budget
The number one tool you need to manage your spending is a household budget. It is a crucial financial tool you need to not only check your spending but have an overview of your finances. There are a number of budget formulas and samples that are readily available online. Some are quite complicated while others are simple to understand.
If it is your first time to create a budget, you need to make it as simple as possible. Trying to take on complicated budgets at the beginning can confuse you and actually discourage you from making one. When creating a budget, you need to spend a dedicated time for it so you can get it right. You have to sit down and go through your finance.
The simplest is jotting down all your expenses and debt obligation on a piece of paper. Then do the same thing with all your sources of income. Remember to include every single item so you do not overlook a payment or even come up short on your budget. Once you do that, you just have to make sure that your income is more than your payments. Otherwise, you will come up short every month and you will not be able to get spending in check.
Follow the budget
The next thing you need to do is follow that budget every month. It is surprising that there are people who invest time making a budget but fail to adhere to it. CNN even shares that only 41% of Americans use a budget. This means that a good percentage of people are managing their finances on the fly. This can result in money mismanagement and can quickly put you in the red.
Once you put together your budget, you need to make sure that you follow it. If you created a grocery list, you need to follow it. Remember all the time you have invested in creating that list. It all goes to waster when you keep your list in your pocket or even leaving it at home. Without it, you run the risk of buying more than you should and paying more at the counter.
Once you have your budget, you need to make sure that you use it. Having one and using one are two completely different things. When you talk about a household budget, it is always a two-prong approach. It will not work if you focus on just one. Create a budget that gives you an overview of your finances and maximize it to get spending in check.
Identify needs vs wants
This is one of the hardest exercises to conduct when you are trying to get your finances in order. This is because a lot of times, you mix one with the other. There is overlap in these two that want is thought of as a need and vice versa. When this happens, you can end up buying more and spending more than you should.
Take for example your food consumption where you can easily mix needs and wants. You might think that ordering takeout is a normal exercise since you rarely have time to eat. However, study shows that you spend an incredible amount of money just for takeout alone. NY Post reveals that on average, people spend about $70,000 on takeout delivery in a lifetime.
You have separate your wants from your needs. You need to eat to survive but you do not have to order everything all the time. Learn to cook, to buy in bulk, and even to cook in batches to help you save time throughout the week. The same thing with a car, you do not always have to get the newest one. You can check out second-hand cards.
Get help to get spending in check
You can also look into getting financial help if you know you are already in deep with your spending problem. If you are married, you can look at your husband or wife to help you manage your expenses. In fact, you should be doing it together. That is part of the relationship – you both need to handle your finances together.
There are also experts who can help you get your spending in check. Professional help is something you can look into to help you manage your spending. They can even help you get into debt repayment programs if you are already in too deep. Debt consolidation and even debt settlement are just some of the programs they can help you with.
Look at a frugal lifestyle
To get spending in check, one of the ideas to consider is living a frugal lifestyle. The objective is to lower down your spending by concentrating on what is important in life. This also has a lot to do with needs and wants but you need to infuse some creativity into the mix. It will help you stay with the program and not get bored easily.
Take a look at your expenses when going out for a movie with the whole family. Tickets, food, not to mention the travel to and from and looking for parking can be a lot. Frugal living means finding ways to do the things you do but spending way less. For movie nights, you can watch a movie at home, make your own popcorn and drinks, and enjoy each other’s company.
There are ways to get spending in check for the new year which will help you manage your finances better throughout the year. Once you do that, you are already making positive changes with your money management which will help you improve and get better financially.