What to keep vs What to eliminate

Setting up a budget is fairly easy… some things are common sense: Rent/Mortgage, Utilities, Food, Medical, Car Loan/Insurance, Outstanding debt etc.

Others can be downsized or eliminated completely.  Depending on your income, and the way you’re currently handling expenses is key… and how you make decisions about what to cut back on or cut out completely.

After figuring what ALL your expenses are (including weekly, monthly, annually), and adding those figures, compare the total with your annual take home pay.  If your expenses are less, kudos to you and keep up the good work (you’re living within your budget)!

If your take home figure is less, it’s time to cut back on things that are unnecessary…. stops for coffee (make it at home), dining out or take out (stop completely or dine out on only a special occasion, gift giving (cut your list down to only family members, and explain you’re trying to get on track (there will be those who will breathe easy and might even admit to you that it helps them too).

Once you do this and you’re getting the hang of it, you’ll think of other ways you can cut back.  Doing this allows you to, if you have outstanding debt, you now have ‘extra’ money to put on that. This, of course, means that your debt will decrease and you will…eventually…have that money to put into savings.

Savings is so important in so many ways.  Saving for an unexpected emergency means that when the emergency arises (and they do), you won’t have the stress of ‘How am I going to pay for it”, because the money will already be set aside.  Aim for $1,000. in that account.

A Reserve Income Savings Account is for when/if you are out of work for a time. With no income coming in, this account will cover your necessities. Only your necessities…rent/mortgage, utilities, medical etc.  Aim for 6-12 months, but as that figure may be daunting right now, aim for 3-6 months.  You’ll be so glad it’s there should the need arise.

So, set up a realistic budget, and live within your means.  That of course means you don’t spend what you don’t have.

It’s common sense!