It’s been said that ‘you can’t improve what you don’t measure’ and that’s what I have in mind today.
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If you want to start improving your bottom line, you have to measure the way you use your money.
For some people, ‘budget’ is a ‘b-word’.
Nonetheless, it is something you must have, and do, to make the most of your money.
If you don’t already have a plan of attack for your paycheck, it is highly likely you can save $500 with a budget.
Here’s how.
Step one is to track the money coming in and the money going out.
Start with calculating what you have coming in from salaries, pensions, allowances, etc.
Then calculate what your regular commitments are.
Mortgage, rent, utilities, insurances, food, fuel, and car payments are the big ones that typically feature in everyone’s budget.
Once you put it all down, it’s likely not as bad as you think.
A whole year’s expenses for me and my three kids is only 28 line items on my spreadsheet.
Think about the whole year, not just your coming pay cycle.
Seeing your yearly expenses will help you to plan for bigger expenditures, like your rates or car registration, that only come up once a year.
Start setting some money aside each pay for these one-off expenses and a little for unplanned emergencies, too.
This will help prevent the ‘sudden’ payments that have you reaching for the credit card.
Once you have calculated your incomings and your outgoings, compare the two figures.
If you have more coming in than going out, you can start saving.
If there is a deficit, congratulations, you just figured out why you can never seem to get ahead.
Progress to step two.
Step two is to trim the excess.
The goal is to get your expenses below your income and one way to do that is to review your service providers.
Call your insurance and utilities providers and ask if there is a better rate available.
Review your phone and internet plans and reduce them if you can.
When I moved into my new place, I cut my internet plan from $100 to $80 a month.
I saved $240 a year with one phone call.
Ask yourself, do you really need Netflix (minimum spend $131.88 a year), Disney Plus ($119.99) and Stan ($120)?
When was the last time you listened to a book on audible ($164.50)?
Listened to anything new on spotify lately ($143.88)?
You’ve tracked, you’ve trimmed, now don’t give up.
A budget only works if you stick to it.
It takes time for a good budget to correct prior bad habits and it might take a few pay cycles to ‘catch up’.
However, if you don’t have a realistic budget and stick to it, it won’t matter how much money you generate trying the rest of the ideas on The Plan, you will always be wondering where it all went.
So we’re starting with the basics.
Remember, you can’t improve what you don’t measure.
The author of The Plan has requested to remain anonymous in order to shine a brighter light on some of the more challenging aspects of their recent financial hardship.
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