What is the best way to budget?

Question

I find that one of the most difficult things to do is budgeting income allocation on expenses. I make a decent living but find that I pay my bills and have nothing left over to take care of unexpected expenses. Are there any suggestions on how to budget appropriately and prioritize expenses?

Answer 1

There's no cookie-cutter solution for this one. All I can do is refer you to a finance blog I visit every now and then, they have a few articles on budgeting.

http://financialbasics.blogspot.com/2006/11/controlling-your-cash-flow.html

http://financialbasics.blogspot.com/2006/11/using-cash-to-stay-within-budget.html

http://financialbasics.blogspot.com/2006/11/personal-budget-planning-tips.html

http://financialbasics.blogspot.com/2006/11/creating-budget.html

http://financialbasics.blogspot.com/2006/12/how-to-simplify-your-living-expenses.html

I think 5 is enough. Anyway, it's better to have a handful of opinions...

Answer 2

Sounds like you may be living beyond your means. Look at your last three months bills - all expenditures. Make a spreadsheet - columns should include housing, food, transportation, entertainment, clothing & hygiene, saving and miscellaneous. (Saving is not an option.) Look at where you are spending your income. If it's on credit cards, put them in a plastic bag - place the plastic bag in a freezer bowl - pour water over it and freeze. You'll have time to think over using that card again.

You can find a cheaper place to live or a cheaper car to drive. Life needs short term and long term goals. Short term means within one year - long term should be obvious.

Eat in and do your own laundry. Rent videos and buy only the ones you love.

Recognize your future is more important than driving the hot car or living in the trendiest neighborhood.

Save, save, save. Put your money in a savings account and keep it there.

Good luck.

Answer 3

No one said it would be easy, but you can try a few things:
1) Save your sales receipts for a couple months, and divide them into necessities, comforts, and luxuries (if any)
2) Decide which ones you could have done without. Be strict with yourself. I'm not saying you should live like a Trappist Monk, but this will help you get a handle on what you spend.
3) You could have an envelope for each expense item, and put money in each, to cover one pay period. Also have one for Savings.

You don't have to do this forever, but just until you get disciplined in the fine art of money management. Good Luck.

Answer 4

I agree with the other two answers. Also, I would suggest maybe allocating some money by direct deposit on your paycheck to a high yielding money market. At least you have your emergency money set aside without thinking about it twice. Then use an Excel or Money spreadsheet and divving up your expense. Find ways to cut on your spending such as not going out as much or bringing a weeks worth of food to work. That cut on on my spending.