Ok, so the holidays are over, and now the bills start showing up, now you wonder just how to make a budget plan that will get you back in control of your money without relying on dust for food!
Just the word budget is enough to send many people running or hiding and hoping the bills will just go away! But you can't keep hiding your head in the sand, you need to attack this head on, but the good news is you can do it in steps that make this a bit easier!
Step one - Figure out where you stand. Take one afternoon (weeknights might be a bit too stressed for these steps, but if you break then down into manageble steps you may be able to do this during the week!) Go and find every bill, every bank statement you can find especially for the last couple of months. Look in the drawers, on the coffee table, and in your room, or where ever the mails tends to get thrown.
If there is a lot of this in your home, then allow at least an hour and find a box and just throw everything in the box. If you are already feeling stressed from this exercise, then that is enough for one day. Just getting everything in one spot is a huge step.
Step two - Put on a pot of coffee or tea, make sure you are well fed, and then gather a calculator, a pen and paper and that box of bills. Start by opening them and getting rid of the envelopes. Now take a highlighter or simply circle the due date for all these bills. Really become familiar with these bills, especially the electricity, water and other bills that have a different amount each month. Place the due dates on a calendar so you can stay on top of them.
If you notice some of these bills going up because of usage, then try and make a plan to cut back on some of these services. For example, some cities will offer lower rates on electricity at off peak hours, consider changing your laundry or dishwasher for example to the lower peak hours for considerable savings. Check with your utility companies to see if they offer this service. Or turn the heat down a notch or the A/C up a notch.
Step Three - Add up your take home pay checks on your pad of paper, and then add up the bills that are "fixed" bills, such as your rent or mortgage, property taxes, utilities, car payments, insurance, and minimum credit card payments for example. These are bills you cannot change and need to pay each month faithfully.
If you get paid twice a month, you could take the total of step three and then split it between the pays. This way you know just how much is left over to work with.
Step Four - Add up the bills that you can do something about, such as groceries, cash spending, entertainment, additional purchases etc. Now these are the ones you are going to try and chip away at and lower. Now before you panic with visions of sitting in the dark eating mac and cheese, just a little tweak here and there can add up big time.
Step Five - Pick the largest expenditure from step four and try and cut it back. If groceries are getting out of control, it could be because you are trying to do them on the way home from work when you are tired, or hungry. See if you can plan a weeks menus for dinner, and at least be armed with a list if grocery shopping is easier after work. With a list in hand, you are likely to get it done quicker and cheaper. Try and stick to the outside aisles, as this will be the fresh food. Limit the amounts of products you get from the center aisles, as this is the packaged goods that are full of salt and cost a lot more than you think!
Many packaged foods, will say "serves 4", in my family, you were lucky if that fed one growing boy! Try and come up with simple recipes and meal plans that you can make quickly and make a double batch so that you can freeze one batch for those "in a hurry dinners" chili, stew, and casseroles work well.
If you normally spend 160 dollars a week on groceries and could shave off 10% by getting rid of the excess chips or packaged goods (or switch to cheaper brands) or the types of foods you are eating, that will put 16 dollars back in your pocket. It may not seem like much, but if you can do this with other expenses it will add up quickly.
Step Six - Cash Spending - This is a big one. Take a pad of paper with you for a week and write down everything you spend cash on, just so you can see where it is going. Pick the items you just cannot do without, such as that morning coffee, and then see if you can do something about the rest, such as bringing your lunch to work, or your snacks etc.
By picking the items you just cannot go without, then you are not depriving yourself, which is what happens with many people when they create a strict budget. How to make a budget plan that works? Make sure you allow some treats. Just get a bit more picky and become aware of what you are mindlessly spending.
Step Seven - If you can find 10% here and 10% there, that you can shave and physically set aside, then you can use this money to make extra payments on any debt, such as high interest credit cards.
Step Eight - Take a good look at your credit card statements. If you have one that is a lower interest rate, see if you can move the other balances to that card. If you don't have enough limit to do this, consider phoning the card company and asking them to raise the limit since you want to transfer a balance. They love to get the competitors money! Then get rid of the paid off ones.
Step Nine - Allow for entertainment in your budget. You can look for many ways to have fun without money in your community. Dust off that library card, and see just what they have to offer. They are no longer just books! You can get the internet, books, and borrow movies too! Start really looking around for deals. Take in a matinee or a week night for that movie, it is usually cheaper.
Step Ten - Feel in control again! Even if you have lots of debt to chip away at, just knowing where you stand will take that stress down a few notches. So, just how to make a budget plan that works? Take the time with your money and your bills, and create a workable plan that also includes fun and you will get to the finish line!