So, in case you missed out, I have been discussing finances, and thinking of ways to reset our relationship with money.
So far, we have discussed, your statement of net worth, what you owe and your money goals.
Today, we are going to discuss budgets. This is going to show us how we are spending our money.
You can begin with how much money you make in a month. For some this may vary, but try your best to estimate as close as you can, or even compare the previous months to get more of an estimate.
Next, focus on your fixed costs, these are costs that don’t change (ex. rent, phone bill, subscriptions, etc.), then focus on your variable costs, which are things that vary from month to month like (gas, groceries, etc.).
Now, you can subtract your monthly bills from your monthly income. Whatever amount is left over is what you can use to pay down your debts, and into your saving account(s), and even your retirement fund.
If you are not happy with the number that is left over, you can use this time to really consider how important your non-essential bills are. Perhaps you have a monthly subscription to something you no longer use. It is time to cut ties with that expense.
Perhaps you still go out for your daily coffee before going to work. Try making one at home instead, and place it in a traveler mug, or just drink it at home until you can buy a traveler mug.
Eating out can be take a huge chunk of money out of your pay cheque, but it’s healthier for you and your wallet to eat at home. You know what exactly you are eating, and there isn’t any hidden salt, or other bad things for you. I know I was scared of going into the grocery store, but perhaps you have a family member or a friend that you can with or you can ask if they can pick up your share.
If you can grow a garden. Or perhaps you can grow one with your close family and friends and you can share what you grow. You can grow a lot of produce and vegetables.
Another suggestion is to engage in No Meat Mondays, because that would be one less meal that contains meat, which is the most expensive things at the grocery. I’m not suggesting you to give up meat entirely, but you might be surprise on the differences it can have your body, and your grocery bill.
And lose that, “But it only costs $5… I’m going to get it.” How many times have you said that in your lifetime? Every 20 times you say that, costs you $100.
Engage and challenge your friends in having one month of no shopping, where you only spend money the bare essentials (rent, hydro, food, transportation to and from work). No leisure shopping! Or you can start small and dedicate a week or two weeks without shopping.
Try going to the library, instead of buying new books. Engage in book swaps with close people. If you read a book of some kind and think, “Wow, I really think my cousin would appreciate this book.” Drop it off on her porch, or send her a recommendation. Perhaps your family and friends can buy an E-Book or an audiobook, depending on what they prefer. Audiobooks are amazing when you have a long commute to work.
You can also swap your clothes with one another, as well.
Feel free to share your ways of cutting down expenses and save money.
Remember your goal should be spending half of your monthly income towards your bills, and try to put 30% of your monthly income towards your debt, and save the remaining 20%.
Ideally everyone should have an emergency fund of $1,000, which takes time to save, but once you do, it is just a comforting feeling. This takes some discipline, so don’t beat yourself up, if you don’t achieve this as fast as you hope.
Although, it might be challenging during these times, but please try to set a bit of money aside, and it doesn’t have to be much right away. But seeing the amount of your savings increasing, it is an amazing feeling. Saving something is much better than saving nothing at all.