Smart Saving Tips For Common Monthly Expenses
At the end of the month, there are many people who only think about one thing and that is to pay their expenses and debts until they run out of money. Today's economy is still not working in the best interest of so many families in the United States. Bringing money home each month takes a lot of effort and family expenses become relentless and pretty much like a revolving door.
In times of crisis, saving and avoiding unnecessary common monthly expenses is essential. How have you been cutting expenses? If you haven't done so well and you're still struggling to save your household finances each month, this article will certainly be of use to you. There are financial products included in an online platform known as “Goalry,” which can help you maintain your goals and manage debt. This includes help with managing your existing expenses and income and having an idea of how to reduce bills.
The Recommendation
According to the recommendation of many financial experts, having a healthy household budget means saving at least 10% of the family's total income, which can be used to reduce debt, create an emergency fund or prepare for retirement in advance. As a document, it becomes a valuable tool for controlling family expenses. Thanks to this document you can use the money in a responsible way, without spending more than you earn.
Monthly Budget
A monthly budget results in an ending balance that reports the difference between what has been entered and what has been spent. Without a doubt, borrowing or spending more than what you earn each month is a fatal sentence for the household budget, analyzing the figures in a hard and real way (in some cases seeing the figures in an alarming "red") will always bring you back to the reality.
To prepare a budget, you only initially need a sheet of paper (if you want to do it by hand) a pen and above all a lot of honesty when it comes to stating common monthly expenses and income. Defining exactly the money you need to cover your regular monthly expenses will help you set your financial goals more easily. You may need to create a document such as an Excel spreadsheet to track income and expenses.
Manage Your Income
The best way to balance your budget is to subtract monthly expenses from income. The remaining money will be what you can allocate for additional expenses and, of course, for your savings fund. If the result shows that expenses are greater than income, you should start preparing a plan to reduce them.
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Determine Monthly Expenses
It is important that you take a detailed note of all the most common monthly expenses you make, taking into account food purchases, phone bill, monthly subscriptions, service payments, transportation, etc. Include payments you make on a regular basis, such as payment for health or life insurance, car insurance, and medical bills.
Distinguish Between Needs And Wants
When we speak of needs, we refer to those expenses that lead to covering a lack; for example, food, housing, clothing, gas for the car, or transportation fees. While desires are wishes, they do not correspond to a real need. It is possible to confuse both, and this will cause the expenses to be greater than what is actually required. If you've already decided to start responsibly scheduling your spending and savings each month, there are some guidelines to help you build your first family budget. Take note of the following below:
Avoid Small And Unnecessary Expenses
What are considered unnecessary expenses?
Well, they are all those that correspond to desires that do not satisfy a real need.
In many cases, these are what end up negatively affecting your financial stability. It is not about limiting your expenses all the time. Of course you can enjoy a meal away from home or some candy. However, these small expenses, if they are generated constantly, in the long run, the expenses will consume a large part of your income.
Avoid small expenses, which are not significant.
For example, if you are a smoker and consume numbers of packs of cigarettes each week, you may want to cut back on that or try to enter a program that helps you to quit. This will not only help you save, but you will also be taking care of your health.
Evaluate And Track Expenses
You should always know where the money is being spent. Carefully evaluate and track common monthly expenses. Being aware of them avoids wasting money on unnecessary things and helps you save. Give priority to certain disbursements, to limit or eliminate the least necessary. In difficult times, it is preferable to know which the priority expenses are and which are expendable (In general, they are those related to entertainment):
Reducing Debt
Reduce or eliminate debt. If your balance at the end of the month is positive, but you still carry some past debts, it is preferable to amortize or fully pay those commitments so that they do not become a nightmare in the future. Set aside an amount each month for savings and set yourself some long-term goals for additional motivation.
Emergency Fund
Reserve a special fund dedicated to emergencies so you can cope with unexpected expenses (whether due to illness, an urgent visit to the dentist, a car breakdown, loss of employment) that usually force you to go into debt and perhaps pay high interests.Develop a lifestyle that is low keyed and conservative. Assuming an ostentatious and luxurious lifestyle, if you do not have the resources to support them, will only make you have unnecessary expenses. Always think ahead. Doing so will allow you to make plans to face tomorrow in a stable way. You already know, the best way to face difficult times is to be responsible with your expenses and smart with your savings so you can be ready in an emergency.
Follow the 30 Day Rule
The 30 Day Rule is the easiest practice to implement, but at the same time the most difficult to follow. Simply wait 30 days before purchasing items that are not basic necessities and resist the urge to buy for as long as you can. After a month, you will have forgotten about the item or your urge will have subsided.
Save the Coins
Today, most people don’t keep coins, thanks to the facilities of paper money. If you use cash for small purchases, put the leftovers in a piggy bank or something that will keep you from taking that money out until the container is full. Use that money to get out of trouble or for small purchases for the household. You would be surprised that these coins can add up and go a long way.
Use Automatic Billing
Get organized by paying home or personal expenses in cash and automate large amounts in through your banking service. Leave the credit or debit card for larger purchases or fixed expenses, or use a monthly billing system, if your bank offers this service.
Separate Expenses From Savings
Keep the amounts of money that you set for your most common monthly expenses separate from the amount of money you plan to put into a savings account. Do not host or combine them into one checking account. If you don’t keep them separate, then you will intermingle and that is where some of the financial issues start.
Every week, make sure you transfer a certain amount to your savings account; whether mutual fund or other investment product. Keep the money for expenses in a checking account to easily pay bills through automatic billing.
Use the Japanese Method
The Japanese use a method known as ‘Kakeibo’. It consists of documenting your variable and fixed monthly expenses along with all combined household income; putting them into categories
For example: entertainment, food, personal, most common monthly expenses, household expenses etc. You are going to need to spend some time doing this so you can change your spending habit and be practical about how you divide expenses and savings.
You have to monitor this system on a continuous basis; daily and weekly; reviewing expenses and making a commitment to set aside time to go through the process. You also have to set aside a definitive amount of money for emergencies; keeping this amount into an account where it is not easy to access. The fact that this method requires dedication each day will mean that you have to be disciplined and the result is that you will know where your money is being spent. You can use a financial app on your phone, a notebook, Excel spreadsheet or a program on your computer.
Curtail Your Eating Habits
While you cannot stop eating, you should be careful about what you spend on food; especially eating out too often. Another thing is that you should not shop while you are hungry. Never go to the supermarket without a list or hungry. Never waste food by cooking too much and then throwing it away. Don’t shop daily at the grocery store or go to the supermarket on weekdays. These are the most common ways to waste money on food, and that's why it is recommended that you:
Eat out only on special occasions
Plan each meal of each day
Take advantage of coupons, offers and discounts
Prepare your food and take it to work
Make purchases in large quantities or wholesale
Your Vehicle
Although you tell yourself over and over again that you need a new vehicle, and that may not be necessarily true at the moment. You may just be convincing yourself to make the new purchase when your current vehicle could do with servicing and last you for another six months. If you do not have a vehicle yet, do not see this as a necessity or that, if it comes into your life, it will make it simpler and cheaper. Cars, whatever model you choose, are very expensive and require a lot of expenses: repairs, spare parts, revisions, etc. However, if you already have one, you don't need to go everywhere in it - these are some recommendations:
Use the public transportation
Walking or riding a bike is good for your health
If you are looking for a car, choose one that suits you, the smaller the cheaper
Choose affordable insurance
To save fuel, fill the tank
Avoid accelerating aggressively
Check the vehicle periodically
Utility Services
Most of us are tied to many services in order to "survive," and some of these can be considered basic and others just superfluous services. In this case, it is good to determine which of these are really needed, or which you must have. Consider making appropriate use of them, so that most of your money does not only go to electricity, internet and telephone. Limit utility services such as electricity, water, gas, internet, and cable. Here are some ways you can do this:
Turn off electrical appliances when you are away (fans, air, lights, radio, television)
Unplug electrical appliances when you're not using them
Use low-consumption appliances
If you have contracted a telephone service, make sure it is the one you need, it is not worth having 200 or 1,000 minutes in your plan, if you are not used to making a lot of calls
If you have a phone, internet and cable plan and you only use the internet, it is time to change plans. Do not pay for something you do not consume
Cable plans are not necessary, with internet you can have the channel you want in real time
Don't pay for a gym membership if you only go 1 or 2 days a week, look for another alternative
Use your electrical appliances correctly, television is not a radio and consumes much more
Use television or computer, not both
Conclusion
Common monthly expenses can never be avoided, but it is the way you manage them that will make the difference. There are so many other ways that you can do this, but documenting income and expenses and eliminating unnecessary purchases is a good place to start.