While there are some people who always have lots of cash on hand, know where every penny of their money is spent and never has to worry about paying their monthly bills, the rest of us need a lot of help in this area. Making and sticking to a budget can be tough, especially in difficult financial times. However, knowing how to create a budget is an essential part of good money management and it can help you get your spending under control.
Even if it seems as though you don’t have any opportunities to save money and set a proper budget, chances are there are little areas in your monthly spending that will allow for it to happen. Sometimes even just the act of drawing up a budget can help you spot out little spending pitfalls that you never knew existed. From online music to movies, fast food purchases to morning coffee, there are plenty of things we buy each and every day that can end up costing us the ability to budget and save.
Start With a Budget
It is important to just deal with the fact that setting a budget is a necessary evil. It is part of learning how to get your spending under control and achieving better money management. Create a budget by making a list of your monthly bills. Monitor your monthly spending for odds and ends, such as paid parking permits, Sunday morning donuts, soda pop at the gas station or anything else you indulge in on a regular basis. Once you identify how, where and when you are spending your money now, you’ll be able to control it better when you create a budget.
The next step is to evaluate your current spending and set goals that will help you reach your long-term objectives. For example, if you want to buy a brand new car and would like to save $10,000, that may take awhile. Review your credit union checking and savings accounts to identify patterns of spending behavior. Looking at all the ways that you waste money each day and how that money saved could help you to reach your goal is a huge step toward responsible money management.
Finally, once you do create a budget, make sure to track your monthly spending to make sure you stay within the guidelines. There are software programs, such as Microsoft Money or Quicken, which can help you create a budget and maintain it throughout the year. Don’t spend too much time on monitoring, however. Studies show that the more time people spend looking at their financial picture, the more stressed they get about it. Stress can sometimes trigger impulse buys and other behaviors that will work against you and your money management plans.
Find Little Ways to Save
Once you have your spending under control, its time to start looking at the little picture. There are tiny little expenses that often go overlooked that, if you can get them under control, will only add to your savings. Speak with your New Bedford credit union representative about credit union checking and savings account options that can reduce or eliminate monthly fees.
ATM machine fees are also one of the ways that people waste money without thinking, so make sure to find out how much you are spending for using a non-credit union ATM. Better planning, such as stopping at your local New Bedford credit union to take out cash before heading on a trip or going to an event, can save you hundreds of dollars each year. Look into the things you do each day and check for convenience fees and other charges that can really add up over time.
Shipping costs for online purchases and other fees that we just take for granted, can sometimes be eliminated if we just take time to read the small print. Some websites offer free shipping if you spend a certain amount of money, say $25 or $35. Purchasing a $20 item but paying $10 for shipping is ridiculous, especially if adding on a $5 item that you need or want anyway could save you the shipping costs.
Watch How Much You Spend
As you begin to build your savings after you create a budget, or if you get a raise or other windfall of money, watch out for a phenomenon known as “spending creep.” Spending creep occurs when you receive a sudden influx of money and begin to spend more as a result. Studies show that the average American household that makes $50,000 or less each year is now spending more money than they make. This happens through the use of credit cards and other types of high interest financial juggling that could ultimately get you in bankruptcy.
As your monthly income increases, through new job opportunities, raises or investing through smart money management, don’t start making new purchases that will get you into debt. It is important to stay ahead of inflation. Some raises are meant to simply be “cost of living” raises, to help families stay afloat during economic change. Make sure you are sticking with your budget and living within your means before you make a luxury purchase or find other excuses to spend that extra cash.
While spending mistakes and issues that require education and discipline are common, it is possible to unlearn bad money management habits. Your credit union checking and savings accounts are a great way to monitor your spending, save money for unexpected emergency expenses and plan for your future. Speak with your New Bedford credit union representative for a list of different checking, savings and investment opportunities that are available to members.