Search Results for: budget

Why You Need a Budget If You’re Broke

December 26, 2019 By MelissaB 1 Comment

When you have plenty of money coming in, budgeting can be easy. You have enough money to pay all of your bills, and you have extra money to put aside for things like a vacation, holiday gifts, etc. My husband and I have been in that position twice during our nineteen-year marriage, and budgeting was fun for me because I could see how we were meeting our goals.

The rest of our marriage, budgeting has been a struggle. When you don’t have enough money coming in to save for anything fun like a night out on the town with your spouse or a yearly vacation, perhaps even not enough money to meet your monthly obligations, budgeting can feel like torture. You may be tempted to join the 59% of Americans who don’t budget (CNN). Yet, this is when you most need to budget.

There are several reasons why you need a budget if you’re broke.

Prioritize Your Obligations

If money is tight, a budget can help you prioritize your obligations. If you don’t have a budget, you may find that you don’t have enough money to pay all your bills, which is never a good position to be in. Without a budget, it’s easier to spend money frivolously because you aren’t as aware of the repercussions. You may even find that you have to take steps to avoid falling into debt and seek legal advice to implement measures such as lowering your child support payments so that you are able to continue to meet compliance with payments. This is important to prioritize for example, as you would want to avoid penalties for non-payment which could result in further financial difficulties.

A Clear Path to Your Goals

Let’s say one of your goals is to save $1,000 in an emergency fund, but money is tight. Maybe you can only put aside $50 a month for that goal. A budget helps you see that if you diligently put away $50 a month, you’ll have your emergency fund in 20 months. Sure, that’s a long time, but you may be able to shorten that time by putting any extra or windfall money into the savings. By doing that, you may be able to establish your $1,000 emergency fund in a year, eight months ahead of schedule.

Why You Should Keep a Budget If You're Broke — Photo by Sharon McCutcheon on Unsplash

If you don’t have such a clear handle on your goals, you may instead spend that little bit of money frivolously every month—going out to eat with co-workers or watching a movie with friends instead of saving it. Having a budget can make the path to your goals more concrete.

A Brighter Future

As you can see, just taking the simple steps of meeting your monthly obligations and prioritizing your goals can improve your financial situation. If you make budgeting a habit, little by little, your financial situation will improve. If you manage to put $650 in your emergency fund and then need a $500 car repair, you can pay for it in cash instead of going in debt. Because you were able to stay out of debt, you won’t need to allocate money monthly to a payment and the accompanying interest. Instead, you can work on reestablishing your emergency fund.

When you don’t have much money, the idea of creating a budget may seem intimidating and futile, but that’s ironically when you most need a budget. If you have a clear view of where you are financially and you have a spending plan, you’re much more likely to improve your financial situation over the months and years ahead.

If your money is tight, do you keep a budget or do you prefer to just wing it financially?

Building A Monthly Budget: How to Calculate Your Costs

November 8, 2019 By Susan Paige Leave a Comment

Budgeting is always the hardest when first starting out. The idea of creating a spreadsheet with a breakdown of every monthly cost and expense is so intimidating that many people put it off for a long time.

All a budget is, in essence, is a well laid out plan. When calculating a budget, what you must do is calculate the difference between your anticipated income and your fixed costs so that you can get an idea of how much you have left for desirable expenses. You don’t have to be an accountant to know how to create a budget plan though, here are some easy tips.

· Add Up Monthly Fixed Expenses

The first thing that you need to do when making a budget plan is to calculate your monthly fixed expenses. These include costs like rent, car insurance, payments on any auto or title loans, or insurance.

You can use a spreadsheet or budgeting app to keep things organized, and accurately access what your expenses look like each month.

· Add Up Monthly Variable Expenses

Variable expenses are expenses that change month to month, and they can be a bit of a challenge to add to your budget plan. Calculating these costs is more of a judgment call than anything else, especially if they fluctuate greatly month to month.

Costs like groceries, gasoline, electricity and discretionary spending can vary monthly so setting aside a specific amount can be difficult. However, by averaging and overestimating variable costs like electricity or gasoline, you can write it into the budget without worrying that the actual costs will be more than what you’ve planned for.

Tips to Keep in Mind when Creating a Monthly Budget

Now that you’ve added up all your monthly costs, you know how much money you need to make ends meet. In a monthly budget, you want to compare these expenses to a monthly income. You don’t want to take into account a holiday bonus that you’re expecting in 6 months, because that isn’t affecting your expenses or income this month. For a monthly budget, use your monthly income to calculate any leftover funds after your expenses.

If you have a fixed income, such as a salary, or you are paid hourly with a set schedule, then this is easy. If your income is varied due to a fluctuating workload, then the best you can do is average your earnings.

Once you’ve calculated your excess income, you can figure out what to do with it. Ideally, you added discretionary spending as a line item in the budget, so your excess money shouldn’t just become spending cash. Any excess funds should go towards debt or savings. If you have more excess income than normal one month, feel free to spend it on entertainment or desirable expenses. Now that you’ve created a budget, you can spend money and still feel financially responsible.

Stick to Your Newly Created Monthly Budget

Now that you’ve gone through the work of crafting a monthly budget that works for you, know that you have a financial plan set. Having a monthly budget makes life easier and making a physical one can better help you visualize the numbers and make adjustments without guesswork.

Making a monthly budget is not the hard part though. The difficult aspect is sticking to the budget, tracking expenses, and not making a habit of exceeding your budget. Going out to eat is fun and enjoyable, but if you do it more than you should, your available income for the month will start to eat into any excess funds you have–and possibly exceed them! If you’ve calculated for the entire month though, splurging every now and then shouldn’t throw you off track. And if you do slip up, relax because you can always get right back on track next month! So enjoy your financially responsibility!

Image source: Pexels.com.

Save Money on the Grocery Budget by Reducing Food Waste

March 25, 2019 By MelissaB 1 Comment

Behind a mortgage, groceries are often the second most expensive line item in the budget. If you’re looking to save more money this year, a good place to look is to reduce the grocery budget. But don’t stop there. Make sure to also look at the other side of the grocery budget—reducing food waste.

Whenever you waste food, you’re essentially dropping money into the garbage. Instead, learn to reduce your food waste to stretch your grocery budget even further. Here are some of my favorite strategies:

Look at your calendar before you shop. Do you have a busy week coming up? If so, don’t plan labor intensive meals; you just won’t have time to make them and you’ll likely have food go bad before you have time to cook it. Instead, make some meals on the weekend to eat during the week when you’re busy or plan simple recipes and buy simple ingredients. Rachael Ray’s Week in a Day is a great springboard for finding recipes you can make on the weekend to enjoy all week long.

Alternatively, you can choose simple meals to make on busy weeknights. Fresh spinach can be sautéed in minutes. Paired with a microwaved baked potato and a simple meat like a polish sausage that can be cooked quickly, and you have a fairly healthy, inexpensive meal. Another option is to keep frozen vegetables on hand to cook quickly and pair with an easy meat and minute rice.

Buy foods your family likes. Too often, people buy a bargain that turns out to be a waste of money because their family won’t eat it. Buy the foods that your family will eat, not the foods that are a bargain.

Use leftovers! Do you eat leftovers? Some people don’t like them, but I love leftovers because they offer me one meal I don’t have to cook! Eating leftovers can be a great way to stretch your food dollars. If your family refuses leftovers, try to cook only as much as your family will eat in a meal so you don’t waste extras.

Create new meals with the leftovers. Another idea is to creatively repurpose leftovers. For instance, if you cook a whole chicken or buy a rotisserie chicken, keep the leftovers to turn into other meals like chicken enchiladas or chicken noodle soup. Thanks to the Internet, you can find plenty of recipes for reusing leftovers. Some chefs, like Robin Miller of the Food Network, specifically look to make meals out of leftovers to help you better utilize your time and food.

Utilize the freezer. One of my favorite ways to reduce food waste is to use the freezer. We recently bought a large box of individual serve guacamole. I still had 8 left close to the expiration date, so I put them in the freezer, and now we just pull them out as we need them. Many meals that you make and don’t want to eat all at once can be frozen for later use.

What are your favorite strategies for avoiding food waste? Do you waste a lot of food or a minimal amount?