Have recent events inspired you to take a second look at your family's budget? Or maybe you haven't had a budget in the past and realize you need one? Here are some budgeting best practices to guide you as you figure out your "new normal."
Collect a few months' worth of bank and credit card statements.
List out how much money you have coming in and how much you're spending. Sometimes just seeing the amounts on paper can change your perspective and your spending habits.
Money coming in could include:
- Your salary and your spouse's, if applicable
- Expected tips or bonuses (this may be lower than a few months ago)
- Income from a side business
Money going out could include:
- Rent or mortgage expenses
- Insurance (health, home/renters, car, etc.)
- Utilities, phone, internet
- Groceries, dining out
- Transportation costs (car, subway, gas)
- Day care
- Pet care
- Gym membership
- Entertainment (streaming services, subscriptions, cable, golf, etc.)
- Investments/savings (any amount you're putting away each month toward a goal such as a vacation or education costs)
- Charitable donations
Tag each expense as a luxury or a necessity. For example, a gym membership might be a luxury to some people, but to you it's a necessity. This will help you prioritize how you spend your money.
Look for opportunities to cut costs, if needed.
If your budget is tighter these days – due to a pay cut, a layoff or simply a desire to save more – here are a few ways to reduce your spending.
- Get creative. Look for cheaper substitutions or find lower-cost ways to do the things you love. For instance, if you enjoy going out with friends, trade in eating out at an expensive restaurant for a picnic outside.
- Cancel subscriptions you're not using. Maybe you subscribe to streaming services you don't use or receive a monthly magazine you never read?
- Shop for lower insurance rates, but don't sacrifice coverage. Homeowners, renters and car insurance premiums can vary widely from company to company. Compare rates to see if there's a better deal for the same coverage.
- Refinance your mortgage. If you own your home, your local lender should be able to compare your current terms to today's rates to see if a refinance would benefit you.
Need more budgeting help? Contact your financial advisor.