Your first priority in building a better budget should be those things that need to be paid every month. Paying these expenses should be your first priority, as these items are not only necessary for daily function, but could also damage your credit if you fail to pay them in full and on time. Set your bills up on autopay to make them easy to prioritize. This way, the money comes right out of your account on the day the bill is due. Factor in your non-essential expenses. Budgets work best when they reflect your daily life.
Take a look at your regular, non-essential expenses and build them into your budget so that you can anticipate your spending. If you get a coffee every morning on the way to work, for example, throw that in your budget. Look for places to make cuts.
- Start by spending less than you earn every month.!
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Creating a budget will help you identify things you can cut from your regular expenses and roll into your savings or debt payments. Investing in a good coffee pot and a quality to-go mug, for example, can really help you save long-term on your morning fix. Check things like your insurance policies and see if there are places you can scale back. If you are paying for collision and comprehensive insurance on an old car, for example, you may opt to scale back to just liability.
Track your monthly spending. A budget is a guideline for your overall spending habits. Your actual spending will vary each month depending upon your personal needs. Track your spending by using an expenses journal, a spreadsheet, or even a budgeting app to help you ensure that you are staying within your means each month. Use the opportunity to see if you need to revise your budget to include new expenses. Remind yourself that getting off-target happens to everyone occasionally, and that you can get to where you want to be.
Build some savings into your budget.
Exactly how much you save will depend upon your job, your personal expenses, and your individual financial goals. Keep that money in a savings account separate from your primary bank account. Building a small general savings will help you protect yourself financially if an emergency comes up, such as a major repair around the house or unexpectedly losing your job. If you have a lot of debt you need to pay down, aim for a partial emergency fund of months, then focus the rest of your cash on your debt. Figure out how much you owe.
To understand how to best pay down your debt, you first need to understand how much you owe. Add together all your debts, including credit cards, short-term loans, student loans, and any mortgages or auto financing you have in your name.watch
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Look at your total debt numbers to help you understand how much you owe, and how long it will truly take to pay it off. Debts like credit cards tend to have higher interest rates than things like student loans. The longer your carry a balance on high interest debts, the more you ultimately pay. Prioritize paying down your highest interest debts first, making minimum payments on other debts and putting extra money into your top debt priorities.
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Such loans can be devastating if not paid off in full and on time. Go straight from paying off one debt to the next. Instead, roll the amount you were paying into your next debt. Pick a savings goal. Try to set a goal, such as building an emergency fund, saving for a down payment, saving for a major household purchase, or building a retirement fund. Keep your savings in a separate account. A savings account is generally the easiest place to put your savings if you are just starting out. CDs make your money much harder to get to for a fixed period of time, but tend to have a much higher interest rate.
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Savings accounts also tend to have a slightly higher interest rate than checking accounts. Many banks will allow you to set up an automatic transfer between your checking and savings accounts. Invest raises and bonuses. If you get a raise, a bonus, a tax return, or another unexpected windfall, put it in your savings.
This is an easy way to help boost your account without compromising your current budget. Since you already have a plan to live off your old salary, you can use the new influx of cash to build your savings. Why buy cumbersome notebooks when you can type on your laptop? Take advantage of what your campus has to offer in terms of activities, rather than spending money on going out.
Many campuses have an array of museums, offer movie nights and other social events for cheaper or, sometimes, for free. Skip expensive spring break and summer trips — look into alternatives, like volunteering, instead. Wait to get a pet until after college — a pet can become very expensive. Not only do you have another mouth to feed, but veterinary bills are costly.
If you love animals, there are plenty of shelters that need volunteers. Make your own coffee.
While coffee shops are convenient, they charge hefty prices that really add up over time. Open a savings account that earns interest. Credit unions have fewer fees and are great for students. Use the free services like Spotify or Pandora offer. Look into class requirements and the options for testing out of classes.
Why pay for a class you could easily test out of? Avoid buying name brand items. Purchase generic items whenever possible. They are exactly the same item, at a highly reduced price. You can even check the ingredients to make sure! Every semester, Fastweb helps thousands of students pay for school by matching them to scholarships, grants, and internships, for which they actually qualify.
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