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Smart Ways to Budget Your Finances

We all would love to be able to spend what we want without consequences, but unless you are able to strike it rich and have an endless supply of money coming in, there has to be a kink in the money faucet at some point and start to figure out how to have more coming in than going out.  Most American’s don’t even budget, two-thirds in fact, according to a recent Gallup poll, so it’s pretty scary to think that there is just sort of a spending free for all and someone you make ends meet each month, which that doesn’t even happen considering the amount of consumer debt.  To avoid being the majority that do not have a handle on their own finances, try a few tips that can help you budget your finances.

Start Tracking Every Dollar

If you asked yourself how much you spent in gas, food, or entertainment last month would you be able to say?  How much are your necessary monthly bills?  How much are your paychecks?  If you are not able to answer those, it is a good idea to start keeping track of first, how much money is coming in every month, but the more difficult, how much is going out.  You can start by pulling last month’s debit or credit card statement (easier if you limit purchases to a card or two) and you can then start to see what was necessary and what was probably unnecessary.

Create a Budget Layout

Once you can figure out how much you are spending, you can start to figure out how much you should be spending.  If you look back on the past few months, or even a year, you can start to see how much on average you are spending on gas and food, but food from the grocery store and not fast food or restaurants.  You can then put together a budget of what you realistically should spend each month, so that you can stay within that and avoid going over, thus starting to hopefully see money leftover at the end of the month.

Spend Only What You Can

By allotting yourself certain amounts for food, gas, spending, you should be able to get through the month on that amount by only spending what you can.  If you find yourself going over, you can revaluate to see if you allotted yourself too little, or if you are spending too much.  Budgeting takes adjusting, but it will also take work on your part to make sure you are starting to limit spending on unnecessary purchases.  Try using only cash, at least that way you can spend what you have, and when you run out you’re out.

Build an Emergency Safety Net

Budgets can really be put to the test when certain unexpected charges hit.  You can try to budget in upcoming events like birthday’s or holiday’s that extra spending will come up, but what about if you have to take your car in for repair?  What if the air conditioning breaks down and you need a service call?  Instead of putting on a credit card where you will then have to find money to pay it back, paying interest until the balance is gone, you can set aside a couple months of expenses in a reserve in case you need available cash quickly.

Use a Credit Card Responsibly

Credit cards can get a bad rap, but that is actually only because of the user where credit cards can get you in trouble.  Sure, they give you virtually an unlimited spending limit that you could be inclined to go on a shopping spree, but if you can resist and use responsibly, credit cards can provide many perks such as rewards on purchases, fraud protection, and being able to reserve a hotel room or car without a huge deposit that would be taken out of your bank account if using a debit card.

Stay on Track and Reward Yourself

Budgeting is tough, so it’s no wonder why most people do not follow one, but that doesn’t mean they’re right.  If you are able to start tracking purchases and reduce spending so that you can free up extra money to start building up your retirement account, then you are on the right track, and you should reward yourself from time to time for your progress.  After all, life is all about the experiences to enhance your quality of life, and you don’t need to save every dollar that you make.


  1. So much yes on those credit cards! I don’t think credit cards are bad, but people can certainly use them badly. We paid off $14,000 of credit card debt and had to relearn how to use credit cards properly. We use rewards credit cards, pay off the balance each month, and use the rewards at the end of the year to pay for Christmas presents.

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