Budgeting Tips

Living within your means is the surest way to not fall into a bottomless pit of debt. But that means really taking your financial life by the horns and getting solid, stable control over your spending habits.

Budgeting isn’t just cutting back on your expenses, although that’s not a bad idea to kick start you in the right direction.

There are remarkably wasteful ways Americans spend their money – chief among them are: wasted energy bills, daily coffee purchases, premium cable packages, traffic tickets, lottery ticket purchases, unused gym memberships, tobacco, alcohol, gambling, ATM fees, expensive (unneeded) warranties, credit card interest, etc…

Some habits that are worth getting rid of:

1. Using out of network ATMs

2. Buying overpriced coffee every day

3. Using retirement money for extra cash

4. Not tracking your spending

5. Only paying your credit card minimums

Now that you’ve eliminated spending those extra dollars, it’s time to sit down and get into the budget. First, let’s take a look at how much you earn. That means everything, not just your weekly paycheck. Do you have any other streams of income?

Knowing how much you have to work with is an important part of this process. In addition to your monthly income, you should include any interest accumulated from savings accounts, retirement funds, financial investments, and so on. Account for your net income, not your gross. This is very important for budgeting correctly.

Once you’ve figured out how much you have coming in on a monthly/weekly basis, you can take a look at how much you’ve been spending. Pour over your bills. Take a look at your bank statements. Find every penny that you’ve sent out into the world. This should give you an idea of your spending habits.

Include your ongoing expenses, such as monthly bills with your home, groceries, child care, insurance costs, debt payments, and estimated self-employment taxes (if applicable). Anything that is non-essential needs to be incorporated as well. This would include holiday gift purchases, vacations, clothes, beauty, laundry, and so on.

Once you have a total for your expenses, subtract that from your income. If you have money left over, this is what can go into savings or pay more toward debt.

Nowadays there’s an app for everything. The internet is an awesome place for resources. There are several spending trackers you can use to help you with your weekly budgeting and management. Mint.com, HelloWallet, and Pocket Expense are a few good options to look into.

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC