If you focus on your budget and what you cannot do with it, you are doomed to failure from the outset. Creating a spending plan works better in many ways – one of those ways is that it incorporates spending into the equation and lessens the pain of budgeting in the first place.
Plastic, Plastic Everywhere
Everyone has a credit card or two, or five. And, therein lays the problem. Credit cards can be very dangerous even in the most frugal of hands. The best way to solve the credit card problem is to allow yourself to have one, and just one.
Pick and choose the credit card that best suits your lifestyle. If you have children, the best type of credit card to choose is probably a rewards card that offers you cash back bonuses or certificates after spending a certain amount.
However, the best way to utilize a credit card is to keep it out of your wallet. Yes, that is correct – keep it out of your wallet and in a lock box somewhere. Let that credit card be for emergency purchases only. By keeping it out of your wallet, you eliminate the potential to use it on a whim. Also, create a spending plan that allows for $50.00 per month on the credit card and allocate those funds once per month for the purpose of paying it off.
Month-by-Month Works Best
Create a spending plan on a monthly basis. If you know that you are one month away from a major holiday, you can allocate a spending amount into that month for holiday shopping. If you are heading toward spring and you wish to allocate funds for summer vacation, incorporate that into your spending plan.
By living on a monthly budget, you alleviate the risk of allocating money for holiday shopping or a vacation and spending it on something else. Plan according to the season you are nearest. So many times, it is easy to put money into a budget and then not allocate it where it belongs. Doing a spending plan on a monthly basis helps alleviate that issue. You buy what you need for that month and spend accordingly.
Add and Subtract
Creating a spending plan that you can live with really is quite straightforward. Add up all your monthly income and subtract your monthly recurring expenses. This dollar amount is what you have left to spend. It really is that simple. While emergencies do arise, they are far and few between and there are ways to deal with that by increasing income and decreasing spending until that emergency boiler or car repair is paid off. There are plenty of ways to have fun at home for a few months while you are waiting to pay off that bill.
Once you see how much money you have coming in and how much needs to go out, you can plan to spend accordingly. One month may be for new clothing while another may be for a family weekend getaway. It’s all in the numbers.