Practical Budgeting

Budgeting is as difficult as dieting: keeping track of money spent is at least as challenging as keeping track of calories intake. That’s why there is such a wide variety of budgeting software available today, but does it really make our life easier?

If you are not computer savvy, or if you do not have sufficient time available to spend in front of the computer learning a budgeting program and then keeping it regularly updated, don’t worry, you’re not alone. There is another excellent, inexpensive, and practical method to keep your budget on track and your expenses in check: the use of envelopes and cash.

Once you have set your budget, label each envelope as per the expense categories you have identified (E.g. groceries, medical expenses etc.) and fill each envelope with the established amount of cash for that week or month, depending on how much cash you feel comfortable in keeping around and depending, of course, on your cash availability.

Once you a make a purchase, replace the cash with the purchase receipt in the appropriate envelope. Refrain from using debit cards since you can’t see the money going out. They make it too easy to spend; thus, ruining your budget.

Use your bank account only for online payments or pre-authorized payments, such as your mortgage, rent, loan, and utilities. Refrain from using credit cards unless it is an emergency, in order to keep your high interest rate debt under control.

If you pay monthly memberships or subscriptions, keep careful track of them especially if they are charged to your credit card, or if they are automatically withdrawn from your account. Often, memberships and subscriptions automatically renew unless you request otherwise in writing. Hence, you may be paying for something you do not even know is still active.

Setup a subscriptions notebook so that it lists:

– Date of subscription
– Monthly amount
– Due date
– Expiry date
– Whether or not you have to request a cancellation in order to avoid automatic renewal of the subscription
– How much in advance you have to send in the cancellation request

This will help you in making sure you are not charged beyond the desired contractual term or amount.

If you can’t seem to find a way to make your budget balance in the first place, you may have too many payments going out to too many creditors. Consider consolidating your debts into one monthly payment by applying for a debt consolidation loan. Even those with bad credit can obtain a loan to consolidate debt if they own a vehicle. A car title loan is approved based on the value of your vehicle, not on your credit rating.

Once you have established your budget and stabilized your cash flow with a debt consolidation loan (if necessary), you will regain control of your finances and with some persistence, be out of debt in no time.

Leave a Reply