How to Live Within Your Budget
November 24, 2007
What’s the most difficult time of the year to stick to your budget? How about the holiday season? Of course, it’s not just the holidays, it can be difficult to live within your means throughout the year. Below are some tips I’ve used to help me stay on track with my budget. Although they may read simply, putting the steps into practice can be difficult and require some sacrifice on your/my part.
1. Pay the Rent/Mortgage First
Regardless of your financial circumstances, you need a roof overhead, a place to call home, a sanctuary from the world at the end of the day. So, your housing comes off the top of your check.
If your check is not big enough, you may have to relocate or find a roommate. When applying for a loan, I was told the house payment or rent should not be more than 25% of the monthly income. Any amount above and beyond that percentage and you will surely be financially challenged.
2. Pay the Utilities Next
The roof over your head will be very uncomfortable, if you are freezing to death in the winter, or roasting to death in the summer. You need to keep up with your utilities. If you are ever required to pay late fees or reconnection charges, it will be extremely costly and put your finances further in the toilet.
If your utilities are too high, you must conserve. In the winter, turn the heat down a couple of degrees and wear a sweater, if necessary. In the summer, turn the air conditioning down to a bearable temperature. When you are not at home, keep the house about 10 degrees lower than when you are home. The same goes for nighttime. Crawl deeper under the covers and save.
3. Pay the Remaining Bills
Before you do anything else with your money, pay your creditors. You bought it, your pay a monthly fee for service, or you already used it, and you need to pay. If you do not pay your bills, the cost rises for the people that do, your credit will be ruined, and debt collectors will start to call.
4. Buying Groceries
You have met all your financial obligations, and you need to buy groceries. Now what? You already know you do not have enough to shop for your favorite food items.
You need to shop sales, used coupons-even if they may be a pain to collect, buy generic, and cut back on your list. For example, I love a good steak. However, I am on a hamburger budget. So, I buy hamburger. Sometimes, even when hamburger seems too expensive, I purchase a lot of eggs and peanut butter. Both are excellent sources of economical protein.
What you buy at the store may not be your favorite items, or even your preferred brands, but you are doing the right thing to stay within your budget.
5. Say “No”.
If staying within the budget is still impossible, you need to learn to say “no”, even to yourself. Personally, I like to watch television, when I have the time. However, if the privilege of cable keeps me from observing the first four budget constraints, it is bye-bye cable. I would much rather feed my kids than watch the news.
If you have more expenses than you have money, obviously something has to go. You may have to say “no” for many things you or your family want, but it is more important to budget for housing, utilities, absolutely necessary bills, and food.
Do you have other advice on how to live within your budget?
Tina
I would say “pay taxes first”. Government can really get you, more so than anybody else.
From what I heard (no personal experience) student loans is another high priority item.
Jacob,
As a mom on the downhill slide toward 50, with a daughter going to college in a couple of years, I wish I could put 10% away for retirement!
You are right. If you can swing it, and still eat, you need to plan for the future.
However, at this point, retirement savings will not do me any good, if I default on my student loans or forget to make a house payment.
Sometimes, it comes down to what we can do on a daily basis.
That being said, if you have the choice between spending money on a luxury or saving for the future, put the money in the bank.
Good plan Jacob!
Tina
Krista,
You definitely have the right idea! My kids and I probably should buy stock in mac and cheese. 🙂
What about the 10-15% for retirement savings? That should actually come before housing. Not everybody is lucky enough to die while they can still hold a full time job.
Great post! I would also switch #3 and #4. I feel you should always take care of yourself before creditors.
Just remember – if you have to decide between buying food and paying creditors, this isn’t a good time to feast on lobster or try a new, expensive recipe. Rice and beans, all the way!
Great comments! Thank you very much!
In answer to the question: when do you pay yourself?
Unfortunately, if you are in debt, it may be a while before you can afford to pay yourself, especially if you have children.
They are always needing new clothes, shoes, etc. Parents can get by with the same old thing, because they are done growing.
That being said, you should treat yourself now and again. For instance, I love a latte. So, I spend money on a fancy cup of coffee 3 or 4 times a week. But, I always make sure my bills are paid first.
In encouragement, keep your eye on the financial goal. When those bills are paid off, you will be able to pay yourself, and not feel guilty for doing so.
Tina
I commented a little bit about this in my blog just the other day. Watch the SNL skit, it says exactly what I want, only better. It says everything you need to know about how to budget.
when do you pay yourself?
Great advice…..sometimes hard to keep to when getting carried away with all the holiday spending for the family. I can budget for myself, but getting the wife and kids to budget is another challenge in itself
I’d have groceries first, or at least before credit card bills. people always skimp on the food they eat. Food equals life. Without good quality food and balanced meals, you can not do anything. Eating healthy actually helps you earn more money to live a better life. Try eating junk food for lunch and then try to go back to work after that. Here’s my post:
http://wastrelshow.blogspot.com/2007/11/your-health-most-valuable-asset.html
Your health: is your most valuable asset.
The only comment I’d give is that #4 (Buying Groceries) needs to come before #3 (Paying the Remaining Bills). Food is necessary, just like housing and utilities. There are the options of food pantries, food stamps, etc in the USA when situations are so bad that you don’t have enough for it.