Living within your means is the key to staying debt free. The way to do this is to set a budget for yourself. Budgets are such a useful tool in so many ways. They can help keep you organized, keep track of your expenses, and can help you identify where you are possibly overspending. There are many ways you can set up a budget which can help you stick to it.For me, actually seeing how much I spend over a period of time helps me realize just how fast things can add up. One way you can create a budget is to make an excel spreadsheet. In the spreadsheet, list all of the stores that you have shopped at(Within the month) and have receipts for and track all of the purchases you make.
|Date||Name of Company||Item Purchased
||Total Amount Spent|
(For more information on how to use Microsoft Excel, you can take a look at this training website from Microsoft, Here)
This way you can see what you bought and how much money you have spent for the month. This way you can set a goal for the amount of money you are allowed to spend during the month and make sure not to exceed that limit. (You can follow this link if you would like to use an existing budgeting worksheet at ConsumerCredit.com)
Another way to budget would be what I do. I have a debit card specifically for entertainment purposes only (Or what I call fun money). I set a spending limit on the card each week depending on how much money I made that week. This way I can’t spend more than the specified amount on the card. I would also make sure that the account does not have overdraft protection. Every type of bank account starts without overdrafting capabilities, but the bank gives you the option. I would not recommend it. This way your card will just be declined if you try to spend more than you have, and you cannot overdraft your balance and incur fees. Over-drafting can cost anywhere from $30.00 and up for each time you overdraft. You can also give yourself incentives. For example, if you have gone a month successfully without over-drafting then you can reward yourself by adding a few extra dollars to the debit card or buying lunch for the day.
Ever feel like it’s hard to budget when the unexpected happens? Here is a way to help. Its called the envelope budget. With this strategy of budgeting, you have an envelope for each category of unexpected bills (Repairs, Vehicle maintenance etc.). Each time you get paid, put a specified amount of money into each of these envelopes. This way, when the unexpected happens, you will be ready.
If you have any other budgeting ideas I would love to hear them.