Like every other red-blooded American, my husband and I have been swimming in debt for years. Our current debt is just over $100,000. Believe me when I say that’s quite a bit less than a year ago.
We have been implementing a budget over the last 11 months, and we’ve been able to pay about $15,000 of our debt during that time. Today, I would like to share with you how we took baby steps to start a budget and managed to work saving money into our everyday spending.
I started dieting at the beginning of this year, and so I began reading everything I could about losing weight and keeping it off. I learned a lot. First of all, there is a lot of literature on dieting, I mean, A LOT. One piece of advice that I read on several articles is to take dieting one step at a time. Making even small changes to your diet can have drastic results.
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The same advice applies to budgeting. You don’t have to go cold turkey on all spending or start saving money. Just cutting out that occasional iced coffee can boost your savings over time, not to mention save you hundreds of unwanted calories.
For any successful budget, the very first thing you should do is know where you are financially. You should start by making a list of your income, assets, and spending.
Knowing how much money you have coming in is paramount to figuring out how much money you can start saving. If you own your own business or have fluctuating revenue, average your income over the last 6 months to get an accurate picture of your revenue.
Once you know how much you have coming in, the next step is keeping up with how much you have going out. Making a list of all your assets is the first step in tracking how much you are spending. Mortgage and car payments are a big part of most people’s monthly expenses so making a list of everything you own will ensure that you don’t forget any outgoing money.
As I’m sure you can guess, the next step is to make a list of all of your spending. That can be hard to do. Keeping up with your bills is pretty easy because you have the physical evidence in your pile of mail, but figuring out all the little spending is where the difficulty comes in, especially if you have kids.
My children think dollar bills grow on trees. During the school year, there is always a fundraiser going on. Usually, it’s something inexpensive, like a pickle sale on Fridays or something similar. All of those little expenses add up over time so working them into your budget is important.
Here are some tips for keeping up with your spending:
Save Your Receipts: Keeping your receipts is an excellent way to make sure you remember expenses during the day.
Use Your Card: Using a credit or debit card rather than cash for most of your purchases creates a documented record of your spending. But be careful not to let the convenience of paying with a credit card encourage you to spend more than you would otherwise spend with cash, though. |
Update Your Spending Records Regularly: At the end of the day, set aside a few minutes to update your records. Remember to include small cash purchases, such as coffee, school fundraisers, and snacks. Go online and look at your pending and posted transactions and add them to your spending list.
Review the results: Review your spending to keep it fresh in mind how much you’ve spent of your budgeted allowance. Regularly making time to evaluate your spending history helps to identify trends. You may be surprised to discover how much you splurged on luxury purchases, restaurant meals, or other incidentals. As you review the information, this can help you find opportunities to cut costs.
By taking these steps, you will have a more accurate view of where your money is going, and you can start cutting corners a little at a time. Take a long, hard look at your spending and ask yourself what you can live without. Start with just one or two things and test out how you can handle it.
Just like dieting, cutting out some things will be harder than others. If you try to cut your spending on one thing and then realize that you can’t stick to it, don’t give up on your savings plan altogether. Just reevaluate your spending and look for other ways to save and give them a try. By changing just one thing at a time, you’re more likely to stick with it and make it part of your everyday routine.
Know Your End Game
Be mindful of the money you’re saving. Make sure that cutting out your afternoon iced latte doesn’t go in vain. If you have a savings account, transfer the money that you saved. If you are keeping a savings jar, add a five to it. Seeing that money accumulate will give you proof of your efforts.
I’ve found that having an end goal helps on those days when I’m feeling particularly weak. If you have something you’re saving for, try taking a picture or writing down how things will be when you’ve reached your goal. Envision the relief you’ll feel once the stress of being in debt is over or imagine how happy you’ll be when you finally have enough for the down payment on your new house or car. Whatever you’re saving for, seeing the end helps with the journey.
I hope your money saving efforts pay off ten-fold. If you have a trick you use as a baby step for saving money, I’d love to hear about it.