Budget for a Better Life

Although they often seem daunting, budgets are essential for managing your money and achieving the financial health and stability you yearn for in life. Budgets are a matter of simple math, but can seem overwhelming when it comes to managing the cash you have and planning for the future. In order achieve a better life and have money for bills, expenses, entertainment, and savings, you need to know how much money you have coming in each month and where it is all going. You do not need to be an accounting whiz to successfully manage your finances, as there are several easy ways to create a budget that will help you to live a better life.

Smartphone Apps: Smartphone budgeting apps offer quick and easy solutions to managing your money. These smartphone apps are free and make it possible for you to budget your money and pay bills from anywhere. With these budgeting apps, you can link to your bill payment accounts and bank accounts and set up automatic payments, payment reminders, and notifications. You can also set up spreadsheets within the apps that will categorize your spending automatically when you pay with a debit or credit card, so you do not need to worry about carrying around receipts.

Cash Only System: If technology is not your thing, try the good old fashioned cash only system method of budgeting. You can set up the cash only system in several ways, and it works because you only use the cash that you have to pay for expenses and bills. The most popular version of the cash only system is to set up envelopes that hold cash for all of your bills and daily needs. When you get paid, pull out cash and sort it into the various envelopes based on the amount of money you need for each bill and expense you incur each month. The amount of money you accumulate in each envelope translates into the amount of money you have to spend on each expense for the month. If there is money left over at the end of the month, you can add this extra cash to your savings account or save it for a vacation.

Decreasing Budget Spreadsheet: As the name implies, this is a budgeting system in which your expenses decrease over time so that you have more spending and savings money available at the end of each month. Create a separate spreadsheet for reoccurring bills, non-reoccurring bills, income, and daily expenses. Once you have these spreadsheets created, identify bills you can pay off or get rid of, and work on eliminating these debts immediately. You can then look at the bills that reoccur every month and figure out ways to save money on each. The second part of this budgeting system consists of keeping a detailed log of everything you spend money on and find ways to decrease the amount you spend on each category per month. Popular opportunities for money savings can be found in line items like restaurants, entertainment, and groceries.

Chip Away Budgeting: If you are in a position where there is not enough money to cover all of your debts each month, consider chipping away at them over time. With this method, you pay all of your necessary bills each month to keep your life going like your mortgage or rent, utility bills, loans, and insurance, and then pick out another debt that you want to pay off over time. This can be a collections bill, medical bill, or other non-reoccuring debt. To start off with, try to find a bill that collects interest and get that one out of the way first. Whether you can only afford to pay $3.00 on it each week or $20 per month, create a schedule and pay the bill religiously. Once you have successfully cleared the debt, pick out another bill and start the process all over again.

Separation of Accounts: Another method of budgeting consists of creating different accounts for different needs in your life. Many banks and credit unions offer free checking accounts and allow you to open up several different accounts as long as you keep a minimum balance at all times. You can set up a checking account that is specifically used for bills and another for expenditures. Open up a savings account at the same time and do not link a debit card to this account. Once you have your accounts set up, set up automatic bill payments with your checking account and let your bills take care of themselves each month. If you receive direct deposit through your employer, see if they will split your check for deposits among the different accounts you have.

Achieving financial well-being is not a feat that happens overnight, but it is possible when you learn to make a budget and stick to it. Creating a budget that works for you requires a little thought and numbers crunching, and a lot of dedication to see it through to the end. Once you have created a budget strategy, work through it diligently and you will be well on your way to being debt free and living a better life.

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