Lexington, KY - Do you come to the end of each month and wonder, "Where did the money go?" Does it seem your outflow of money is more than in the intake? Do the majority of your marital arguments center around finances? I am no financial guru and I confess that over the years my husband and I have had our share of late payments and even later night arguments about money (reading that nearly 80 per- cent of divorcing couples cite financial problems as the leading cause of the marital demise comes as no surprise). But in recent years we have taken control of our finances, cut costs in unlikely places, made better use of our resources and saved money; simply put, we learned to budget, and you can too.
Look at Your Money
Although rudimentary, the first step in budgeting is critical. Budgeting is not sim- ply writing down the bills you pay each month. The real work begins with know- ing how much money comes in and how much goes out. Little expenditures like buying a magazine in the grocery line or sneaking in an afternoon candy bar from the vending machine add up to a staggering total. One of the best ways to see where your money is going is to save all of your receipts for one month. This gives you a very clear picture of where you indeed are spending your hard earned dollars.
Set a Budget
Setting a budget will take time and to be honest, it isn't fun. Designate a Saturday to sit down with your pile of bills, bank statements, checkbook and any household member who also needs to be in the financial loop.
Your bank's website, as well as several online sites like Mint.com and Crown Financial Concepts, can help you set up a basic budget and help you track expen- ditures throughout the month. Naturally, there's even a handful of iPhone apps ded- icated to budgeting and finances.
On the opposite end of the technology spectrum is a popular budgeting approach called the envelope system. At its most basic level, the envelope system uses cash which is divided into envelopes based on your needs for the month. Envelopes labeled for groceries, entertainment, clothing and household items are filled with the cash you have allocated in your budget, and when the money is spent there is no more spending in that category until the next month.
The idea of budgeting is to help eliminate stress, not add to it, so be sure to choose a system that works for you and your household.
Time Is Money
Well-spent time can be a financial investment. When sitting down with your bills, evaluate each one to determine if you can save even the slightest bit of money each month. By simply calling your long distance phone company for a lower monthly plan or switching insurance providers, you could save you a load of money each year without feeling the squeeze.
Make Hard Choices
The quickest way to burn through money each month is to eat out. Which means one of the easiest ways to save money is to eat at home. Invest in an easy weeknight cookbook, a few spices and basic ingredients and make cooking at home begin. When you do eat out, forgo the $5 craft beer and the overpriced $3 soda and opt for water. Begin sharing those oversized restaurant portions too. Your wallet and your waistline will thank you.
Heading to the mall because it is raining and "there is nothing else to do" is a reckless choice for your bank account. Simply put, stop shopping out of boredom. A quick trip to buy toothpaste can soon turn into an hour-long stroll, swooning over the new extended lash mascara and the designer labeled sweaters. Inevitably swooning turns to buying, and the $4 toothpaste trip becomes a $65 budget break- er. Browsing leads to buying and when your financial goals are larger than a tube of mascara or a new video game, it is time to find another hobby.
Finally, avoid expensive friends. We all have them. The casual friends that want to meet for after-work drinks or the friend that always asks you to pick up a $5 mochalattechino drink (and conveniently has no cash to pay you back) can be dis- astrous to your financial goals. Instead, suggest everyone meet at your place after work for a BYOB gathering and tell your boutique-coffee friend that you will glad- ly bring them coffee if an afternoon caffeine fix is what they are after.
Set Financial Goals
Budgeting is not meant to make life unexciting and full of drudgery. Just the opposite is true in fact. Once you have control over your spending and have a firm knowledge of where your money is going each month, you can begin to pay down debt and put money aside for more meaningful things.
Pass It Along
Budgeting is a learned habit. It takes work to budget money responsibly and unfortunately many of us were not instilled with these principles growing up. So as you learn and grow in this area of budgeting, take time to pass the lessons along.