Do you have someone you trust to tell your deepest secrets and to be vulnerable with? You would probably consider that person to be your best friend right? Well, what if your budget could be your new best friend? No really!
Most people either cringe at the thought of a budget or even the word “budget” while others probably do not even know what budget means. We are here to help you see that your budget can be a great tool to help you feel more comfortable and at ease, just like your true best friend in life!
How a Budget can Help
A budget is a way to keep yourself and/or your family on track with spending while also holding yourself accountable for what you are spending each month. One of the first steps to managing your budget is learning how to do that. If you have multiple credit cards and debt accrued, it may be hard at first to find those extra dollars. You will have to train yourself to spend less.
#1: Prepare a Budget
If you’ve never had to budget before, we won’t lie to you, it will take some time and dedication. However, the result and reward will be worth it. You’ll feel a little lighter knowing that you’re only spending what you can afford and that you’re disciplined and have control of your finances. You will need to know some key information before you can begin making a budget like your monthly income, your monthly bills, and your plan for how much you would like to spend each month.
Feeling a sour taste in your mouth? It’s okay to feel that way, especially in the beginning. A budget can be great and does not mean you have to eat bread and water for every meal to try and save money. Remember, you just have to be smarter about your decisions and know that reaching your goal is just around the corner. You will actually feel more in control of your money and more confident about the financial choices you’re making.
First step, write down your total income. Do not leave anything out. Your total pay after tax for you and your spouse or significant other.
Next step, list your expenses. The mortgage, the power bill, water bill, cable. (This is where you ask yourself if you REALLY need 350 channels dedicated to sports!) Don’t forget to include your non-monthly bills such as a quarterly HOA due or insurance payment as well as things like credit card bills, groceries, gas, etc. Now add up your income and your expenses and see where you are.
#2: Review and Adjust Your Spending
If you feel like you are spending too much in a certain area, such as at the grocery store, start making a plan for your shopping trip. Take a look at the sales paper before you hit the road and even try going generic. Store brands are typically much cheaper and contain the same ingredients as name brand goods.
Or if you have large debts like credit card bills or student loan payments, start trying to pay those off more and more each month. Once you get the figures down you will see the light at the end of the tunnel and be that much closer to paying them off forever. The money you’re able to save each month should be applied to pay down higher interest accounts such as store credit cards. Store credit cards are notorious for charging between 23%-32% in interest.
#3: Look for Areas Where You Can Save
If you currently have a home mortgage and feel your payments are too high or you would like to pay less, you should consider refinancing. Refinancing and moving your loan to a lower interest rate can help you save money each month, with little effort! Some things to know if you qualify for a refinance are your credit score, your current loan terms, and your break even point.
Keep in mind that if your credit score is low, it may be harder to refinance, especially at lower rates. Refinancing with a poor credit profile could mean paying more upfront or over the life of the loan.
It’s important to know where you stand with the current mortgage you have in place. If you have owned your home for a while and you are close to paying off (say within 10 years), at an interest rate of 3.5%, you’re probably better off keeping your current loan term. The break even point is the point at which you will break even from the cost of refinancing. You simply take the fees for refinancing and divide by the amount you would be saving each month. Refinancing helps you save in the long term, but saving is saving when you are hashing out a budget!
Also, take some time to review your insurance premiums and what you are paying for. Many people don’t realize they may be overpaying for things like car insurance or homeowner’s insurance and stay with their current company. We’ve all heard it, “we’ve been with them from the start”. If your rates are increasing each year and your premium seems to get higher and higher, it’s time to shop around. Talk with your agent and tell them you would like to see if you can save some money. Sometimes you can reduce your deductible or coverage for things that you may not need anymore and actually spend less each month.
#4: Use Free Resources
Budgets are Sexy and Penny Hoarder are great websites that provides articles to help you learn how to budget and will support you in your new endeavor. You will find great tips and tricks for staying on track as well as some ways to make money! If you are a mom that is struggling to find ways to save for your family, check out Money Saving Mom for some great tips and stories from other moms like you!
In this tech-friendly world we live in today, we can use our phones for just about anything. If you are ready to budget but need some help, there is always an app for that! A really great budgeting tool for day to day use is BUDGT. This app is better for those with smaller incomes like single young adults whose budget will not include many details.
The Whole Family Can Get Involved
A great option for a larger family is the HomeBudget with Sync app. You can actually track your income, bills, and account balances all through this one app. If you want to just get right down to the truth, You Need a Budget is just what the name implies. The app is based on a proven method of just 4 basic rules and can help you gain total control of your money. The company also offers free classes and a blog with interesting help and support as you set out on your budgeting journey. Check out our blog about personal finance apps for even more great options!
Consider a Refinance
Lenda offers a hassle-free, stress-free option for refinancing and will give you a customized rate quote in minutes! Even if you find that you can’t refinance, you can still save money on your mortgage with these great tips. Make contact with us today and let us help you find what you’re looking for.