While two-thirds of American’s do not even use a budget, it is important for the remaining third of the population to have a successful budget to stay ahead of those that do not. If you find your budget is not working, then it is time to re-evaluate monthly spending and where funds are allocated to go. Although hiring a professional may be the solution for some, others may just be a couple tweaks away from a successful budget and staying out of debt.
Give a Little Wiggle Room for Events
Monthly spending could be on a tight leash, but if you do not have any excess funds leftover when events come up then you will be back in the hole. If you know of birthday or holiday spending that will be coming up, then budget a little extra to save up.
Continue to Reduce Impulse Purchases
Removing unnecessary purchase is the goal, and although it may not happen overnight, impulse purchases could be a first to go. If you are wanting an item, walk away and give yourself a few days to think about if the purchase is necessary. Ditching the plastic and using cash is another way of reducing impulse buys, as physically handing cash over gives the feeling of losing money, at least giving you a second thought about the purchase.
Don’t Forget About Bills Coming Due
You may have kept track of each monthly bill, do not forget about the semi-annual expenses such as a water bill that will be paid quarterly, or if you do not escrow, a tax bill. If you are scheduled for regular visits to the doctors as well then budget for co-pay’s and annual deductible payments.
The End Goal is to Contribute to Savings
While you are monitoring spending throughout the month it is still important to make sure you do not forget about continuing to contribute to your emergency, savings, and retirement accounts. Experts say that three to six months should be in an emergency account, so once that is funded, move on to the next.
Review Each Month
There is no point to doing a budget if you are not going to review the results each month. Keep a trending report of how much came in, went out, contributed to savings, or paid down debt. Even if the results are poor to start it is important to see the progress, while continuing to adjust each month.
Start utilizing the tips above before you find yourself in an irreversible situation. Once you find yourself need to rebuild your credit the damage is already done and the effect on your financial future can be detrimental for years to come.