How to Control Your Spending With a DIY Budget
Are you having difficulty making ends meet? Are you spending more than you’re making? Well, the answer may be as simple as sticking to a custom-made budget that gives you the power to control your spending habits and take charge of your life. Let us show you how you can do it.
Step 1: Where’s the Money
You can make your own budget or hire a professional debt-counseling agency to do it for you. If you do it yourself, begin by writing down the income you make, what you have in savings, your expenditures and your debts. Now carefully review where all your money is going and try to get rid of any expenses you really don’t need.
Step 2: Following Your Tracks
To get a clear picture of your spending habits, we’ve supplied a helpful worksheet: Worksheet 5: Daily Expenses found in Appendix C. Make eight copies of this worksheet and then date and record all your expenditures for the next two months, using a new sheet for the start of each week.
When recording your expenses, signify the method of payment: cash, cash equivalent for check, bank withdrawal, debit card or ATM. Be sure to include all bank transactions, deposits, investments, money market accounts and bank fees.
In regards to items you purchase with a credit card, only list those expenditures once they are covered by your credit card payment. Unless you pay off the credit card bill each month, you may have to list fewer items to make up for the interest charge. Along with your monthly credit card payments, list any other monthly payments you make, such as your utility bills, mortgage or rent payments, car or school loans and donations.
As for those things you pay for annually, quarterly or semi-annually, such as property taxes, insurance payments and vehicle registration fees, list them as other expenditures on a different form after your eight-week mark. Be thorough and remember seasonal spending, such as your children’s summer camping fees and holiday gift buying. It’s important that your budget accurately reflects all your expenditures.
Step 3: Time to Review
After eight weeks, review your worksheet. It will give you a clear picture of your spending habits. At this point, you’re ready to make your budget!
Step 4: Creating Your Budget
Using Worksheet 6, you can now create your budget, or spending plan. Following your budget, you’ll learn how to control the amount of money you spend by curbing impulse-buying and spending wisely. It will also teach you how to save money, which will help you to pay off your debts and rebuild your credit.
Begin by making a few copies of the monthly budget worksheet. Fill out the categories according to your own expenses, crossing out those you don’t have or typing in some that aren’t listed. Under the column labeled projected, in each category write your actual average monthly expenses.
Then add up all the expenses you tracked for two months and divide them in half. For your annual, seasonal or quarterly expenses, divide the amounts to get a monthly payment. For instance, $2,400 property tax would be listed in this category as $240 per month.
Step 5: Final Tallies
At the bottom of the column marked projected, write your final estimated monthly expenses on the total expenses line. Then put your estimated monthly income under the estimated total expenses. You will see that if your expenses are more than your income, you’ll need to cut back on your spending habits or find a way to increase your income, so you can adjust your budget to make it work.
Step 6: Living By Your Budget
Repeat the process of your budget report, labeling the columns by the months and updating any expenses in the categories. Continue tallying your spending at each month’s end to make sure you kept to your budget.
If you find yourself consistently overspending in one category, try cutting in another area of your budget. Your budget can be changed to fit your needs so don’t get frustrated. Remember, budgets are tools to help you simply keep track of your money.
Step 7: What to Do If You’re a Compulsive Overspender
If you are constantly overspending, learning how to control your money, not reducing your debts, is your antidote. You might want to visit debtorsanonymous.org to get more help. Here are a few other suggestions:
• Stop buying on impulse.
• Don’t purchase sales items because you still spend money on an unnecessary sales item.
• Purchase medical insurance in case of a medical emergency you might not afford.
• Pay for everything with cash, which can reduce spending.
• Avoid risky investments. Instead, consider money market funds or certificates of deposit.
• Move to a more affordable home.
• Don’t be a cosigner on a loan.
Wouldn’t it feel great to live with your debts gone? Well, obtaining financial stability is nearer than you think. Just try our budgeting tips for yourself and find out what it is like to live a life free from the cumbers of needless debt.