Right now, it has never been more important to manage your bills and get your finances under control. The economy is going through a particularly rough patch, food and gas prices are going up and it can be pretty hard to make your paycheck stretch each month. If you’re finding it difficult to keep up, now is the time to start making some changes before you get in over your head.

Most people really don’t realize how much they spend every single month. The vast majority of Americans do spend more than they make, and many of these expenditures are for non-essentials. There is one very important thing that everyone should do to determine whether or not they over spending. For a period of one month, keep a log of absolutely everything you buy or pay, from that pack of gum to the bills you pay.

At the end of the month, add up everything to see just how much you spent. Chances are you may be pretty surprised at just how much is going out the door. If you are spending more than you are making, or if you are not putting anything in a savings account or investments, you need to figure out how to cut some of your costs.

Go through your month’s log and split everything up into two columns. The first column should be your essentials, such as rent, utilities, car payment, insurance, phone and groceries - but not eating out. Total all of this column to see how much you have to spend every month.

Now put everything else in the second column and total this one up as well. This will be the amount where you can start cutting some expenses. Go through the list one more time and check off the things you don’t think that you can do without. Put these in a third column. Everything else should be examined in that second column and reevaluated. For example, if you are spending $100 every month eating out, you can easily cut this in half and put $50 aside.

All of these little expenses add up quickly and before long, we’re overspending without even realizing it. Once you have everything divided up into three columns you can determine what kind of budget you want to work with. Your goal should be to put as much money aside as possible.

Once you free up some of that cash, you’ll need to work on creating more income so that you don’t have to live quite so frugally. Consider using this to create another stream of income through an investment or opportunity. This can help free up more money that can be spent on non essentials, or that income can go back into another income stream. If you don’t have any available cash to do this, consider leveraging a loan to create an income stream to take the pressure off of your paycheck. This can really make a difference in how much money you have coming in every month.

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Categories:

Budget, Money, Personal Finance, Standard of Living

Tags:

car payment, economy, expenditures, gas prices, groceries, gum, insurance, investments, paycheck, rough patch, savings account

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