18 of 55

Write now Article Tools

Page 2 of 2

restaurant is not a necessity. Even necessities may be more expensive than they have to be. You may find that a less expensive car gets you around just as well as the expensive model.

Look at all your expenses, both necessary and discretionary. Which are important to you? How much do you spend on the unimportant? How important is it to you to have the version of necessities you have (model of car, apartment or house etc.)? Once you do that you can decide which expenditures to eliminate or reduce. If you like to travel you may prefer a smaller apartment or house so you can save money for travel. You may decide that the fancy bottled water is not worth the price, you can drink tap water which is nearly free. (That fancy water, by the way, often costs more per gallon than gasoline and most tests show that it is no better than tap water.)

Don't forget to budget for emergencies. We don't like them, but they seem to like us. We seldom manage to avoid emergencies for long. Be prepared for illness, car problems, the trip to Aunt Tillie's funeral etc. Savings in the bank, where you can get it quickly, can be a financial lifesaver when the unexpected arises. Of course you should also have a good retirement plan, either at work or on your own.

What you should end up with is a list of all your income and expenses, plus some regular savings. It is easiest nowadays to put this on a computer spread sheet so you can easily look at what happens if you cut down one place or spend more somewhere else. You can try several different changes to the budget to see which you prefer. This allows you to cut out the expenses that cost more than they are worth, and to spend your money on things that matter to you.

Remember, the purposes of a budget are:

1. Live within your income so you don't have creditors hounding you,

2. Prepare for the future, such as emergencies and retirement, and

3. Spend your money in the manner that will give you the happiest life, within the constraints of your income and any special needs you have.

Make and follow a careful budget based on the above and you will be happier, less stressed, and more financially secure.

Learn more about this author, Hal Lillywhite.
Click here to send this author comments or questions.

• << previous page
• 1
• 2

Add your voice

Know something about How budgeting can improve your life?
We want to hear your view. Write now!