Part 2.
To get you started with saving your money, to help relieve the stress and other issues often associated with debt, you will want to start by outlining all expenses that you must pay for on a monthly basis.
These expenses are ones in which you cannot go without paying, like rent, mortgage, homeowners insurance, auto insurance, auto loan payments,your utility bills, and finally, groceries. These are the expenses that must be paid, no matter what. If you have any money left over after all these obligations are met, you are fortunate.
Once you have a detailed list of important expenses, the next items are luxuries you have to decide upon. There is no right or wrong answer. You just need to remember that everything involves a sacrifice. So try to keep your long-term financial goals in mind when deciding on whether or not to spend money on these luxury items.
Such items include internet access or cable television. If you are just looking to save money, possibly to put into a savings account, you should be able to continue paying these expenses without any problems.
On the other hand, if you are looking to dig yourself out of all of the unpaid debt that you have accumulated, it may be a good idea to go without internet access or cable television, if at all possible, even if it is just for a short period of time, to pay down that debt, so the interest doesn’t keep accumulating. Some credit cards can carry an interest rate as high as 30% and some sort cards, almost 50%.
There is no point in putting money into a savings account at 4-5% if you are paying 30% for debts.
You can also use your budget to determine how much extra money you will have each month. You can do this if you regularly work the same hours or if your pay is salary-based.
Once you have totaled up all of the aforementioned expenses, you can subtract that from the amount of the money that you bring home each week. Any extra is money that you may want to consider putting towards your debt or savings. Once you are free of debt, then you can start to save.
We have other articles at the site on budgeting and on asset management and investing. The important thing to remember is to get out of debt as fast as possible, or never get into it. Then, once you are debt-free, you can start saving towards your long-term financial goals.
A budget is not meant to be a straight-jacket, but it will help serve as your road-map to a more successful financial future.
