Setting a monthly budget can be one of the first and most important steps to improving your financial well-being and working towards building wealth. However, setting a budget can only do so much if there isn't a lot of money left over after all your bills have been paid. If you want to add more to your savings, then you need to take a closer look at your monthly budget and start putting these common budgeting practices to work for you.
- Track your spending.
Before you can begin to reduce your spending, you need to understand exactly where your money is going. You might not be able to reduce the amount of money you have to spend on gas for commuting to and from work, but chances are that you can spend less on eating out and other entertainment. Start by simply tracking your spending for a week. This will open your eyes to where money is going and reveal some spending and lifestyle habits you may be able to adjust.
After a week of tracking every penny, identify three main areas where you would like to reduce spending. Instead of continuing to track everything you spend, which can be difficult to sustain, simply pay attention to these three areas and cut those expenses.
- Cut the cord.
Cable is not cheap and you are basically spending hundreds of dollars to have an easy way to kill time. With streaming services, there are plenty of less expensive ways to consume media and you can still watch your favorite shows. In fact, you can probably simply ask a family member to be added to their account, which could essentially eliminate your cable/home entertainment bill altogether.
- Take a close look at your phone bill.
This is another area of the budget that can quickly become inflated without you even realizing it. Take a look and see exactly what services you are paying for and whether you really need them. For example, you may be paying extra every month for data that you never use. You may even consider reducing your data usage in order to cut back on your bill.
- Cancel unnecessary subscriptions.
Whether you get the paper every day or you are part of the beer of the month club, it might be time to cut back on monthly subscriptions. When it comes to magazines and newspapers, you may be able to simply read the publication online for free or you can always stop by the local library and read their periodicals.
- Buy generic products.
From food to shampoo and other hygiene products, most stores offer generic or store brand products for a fraction of name brand products. If you have been loyal to certain, more expensive brands, you may be surprised to find that the generic alternatives are just as good.
While it might feel like there simply isn't any way to squeeze more money out of your monthly budget, there are always ways to save. Start by understanding your budget and begin to shop around for cheaper alternatives that will help save money.