It’s not easy sticking to a budget, I get it. Our lives are constantly evolving and surprises pop up out of nowhere. How can you possibly be expected to live on a strict dollar amount each and every month?
The answer is, you don’t. By monitoring your spending and recognizing that your budget is flexible, you can make great strides in increasing your happiness when thinking of money.
There are a few main areas of our lives that I have recognized to be “Budget Busters.” These are the areas that, if ignored, can do real damage to your monthly budget over time. However, with just a little bit of focus, can make all the difference in living a great financial life.
Unnecessarily High Bills
We all have a few expenses in our budget that can probably be reduced significantly, while being able to maintain the same quality of life. These expenses can include your cell phone, internet, cable, music subscriptions, clothing subscriptions, and more.
The first step in attempting to reduce these expenses is simply calling your service provider and asking for a discount. You can explain how you’ve been a quality customer for the past few years and would like to find a way to reduce your bill. Go through each monthly bill you have and see how much you can reduce your bills. It wouldn’t surprise me if you could reduce these same bills by hundreds, if not thousands of dollars.
The next step is reviewing whether or not these service providers provide you with the best cost for what you need. About three years ago I switched from one cell phone provider to another and saved $50 per month. I kept the same phone and all I needed to do was swap out the SIM card in the phone. This move alone has saved me about $1,800 to date.
Are there any monthly subscriptions you no longer use? Even better - cancel it.
Repeat this process for all of those recurring bills you see on your bank and credit card statements. Unnecessarily high bills are surely a budget buster.
Not Following a Budget
How do you know how much room you have in your budget if you don’t keep track of your spending? Often times, you will be pleasantly surprised to find that you have hundreds, if not thousands, of dollars left over at the end of each month to start putting towards your financial goals.
You can either use online budgeting software that populates your spending nicely, or track it yourself with a spreadsheet. I personally prefer the spreadsheet. I have created categories for my spending and add up the expenses within each category at the end of the month. This process takes just a few minutes and provides me with the peace of mind that I’m living within my means.
You’ve heard of “Keeping Up With The Joneses” right? Trying to keep up with our friends’ spending habits can be a killer to our own. This doesn’t mean you can’t indulge and do your favorite things with your friends, but you should be careful. Maybe you can find a free event to attend instead of the expensive dinner out. There are a number of ways you can spend time with your friends without breaking the bank.
This all goes back to setting your goals and being aware of what you want to accomplish over time. When you have a purpose for saving your money, you will be that much more motivated to stay the course. Saying “no” to an invitation becomes easier when you know what you are saying “yes” to.
One of the biggest purchases of your life is your home. The easiest way to turn this potential budget buster into a positive is by purchasing within your true means. By keeping your total housing costs low, you free yourself up to spend or save money in other areas of your life that mean much more.
Starting out, you want to make sure your total housing costs don’t make up more than 25% of your take-home pay. Next, you want to be committed to living in your house for at least 5 years. This is because when it comes time to sell, you will be facing closing costs that amount to 10-15% of your home value.
Lastly, the bigger the house you have, the more expensive it is to maintain. You have a bigger roof to replace, more flooring to fix up, bigger rooms to keep at the right temperature year round, and more. Consider a smaller and less expensive home in order to free up your budget both now and many years to come.
At the end of the day, you don’t want to put too much pressure on your budget by living paycheck to paycheck. By tracking your spending on a monthly or quarterly basis, you can easily spot where you are spending too much, and where you can splurge a bit. When you get intentional with your spending, you will feel more financial empowerment than ever before.