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When Pennies Count, These Budgeting Tips Could Save You Hundreds of Dollars Per Month

The current state of the economy has been a wake-up call for many people and it's causing them to get serious about saving money and eliminating debt now.

In order to increase your savings, pay off debt, or just stop living paycheck to paycheck you have to do one of two things. You can either earn more money or spend less.

For many of us, it will take a while to earn more, but we can start spending less right now.

Track Every Dime Spent

The best way to start living on a budget is to start tracking everything you spend for a couple months. Carry a small notepad with you and log every purchase. If you have a spouse make sure he or she does the same. Soon you will have a good idea of your spending habits, and you can start trying to find items on your list that can be eliminated or reduced.

Once you add up how much you spend each month, compare it to your monthly income. Hopefully you earn more than you spend. If not, you must be using credit to get some things paid. If this is the case, you need to start making cuts in your spending, so that you don't have to borrow to finance your spending.

Here Are Some Budgeting Tips That You May Consider:

* You may find that you are paying too much for telephones, internet, and television.

* Your cell phone provider may offer a cheaper plan that still offers you enough minutes to get through the month.

* Do you still use your land based phone line? Many people are getting rid of their land line and going with cell phones only for their communication needs in order to save money each month. You might even try that new Magic Jack phone service. We just switched to Magic Jack and it works great. And best of all, we are saving about $920 per year on phone services, now that we have switched phone providers.

* Many internet providers offer different prices for plans based on the speed of the service. Maybe slowing it down would be worth the money saved.

* If you are subscribing to cable or satellite television, you can probably find a cheaper package by reducing the number of channels you receive.

* If you don't want to cut out any of these services, maybe you can buy them all from one company and save by bundling them all together.

Utilizing The Envelope System

Once you have your list of your usual spending, start working on a budget. Some people find it works best to assign every dollar they make in a month to a certain category.

One method that a lot of people use to try to stay within a budget is to use an envelope system. You get an envelope for different items on your budget and place the amount of money you expect to spend that month in the envelope. Once you spend all the allotted money, you can't spend any more in that category.

Some people make an envelope for several categories like groceries, eating out, gas, clothing and entertainment. Some people don't need to make envelopes for every expense. Maybe they find the thing that is making them spend too much each month is that they eat out too often. Making an envelope for eating out would help them keep track of how much they spend at restaurants and let them know when they are at their monthly limit.

The main goal of most budgets is to lower spending so that there is more money to put toward savings. The amount you intend to save should be included in the budget so that it is not neglected. Treat savings as you would any other expense in the budget. Also, remember that if you end up spending less than the budget, you should apply that extra money to savings or paying off debt.

Handling The Management Of Infrequent Expenses

The thing that probably gives people the most problems when it comes to making a budget is that a lot of expense don't occur on a monthly basis. Homeowners insurance and property taxes are often due once a year. Auto insurance is usually due every six months. Auto maintenance fees are often unpredictable, but the oil changes and tires are fairly predictable.

You might not buy clothing every month, but if you keep track of your spending you'll soon figure out roughly how much you spend per year for new clothing. For the expenses that don't happen every month, just calculate how much you spend on those categories each year and divide by twelve. This will give you a monthly amount that you can budget. If you save that amount every month you'll have the cash to pay those bills when the time arrives.

Some financial experts even suggest opening a separate bank account for these types of expenses. You might not feel that is necessary, but you'll want to keep track of these categories with either a notebook or a spreadsheet.

Never Get Angry or Give Up

The last thing to remember is that you shouldn't get upset if you can't stay within the budget the first month. It takes a while to get the budget adjusted to match what you need to buy. Just keep making a little progress each month and you'll be much better off than those who follow no budget at all.

Fred Vanhoosen writes about the payday loan / cash advance industry for www.fastcash4all.net/

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