Have you been wondering how to budget and save money at the same time? It doesn’t seem possible. After all, you are trying to save money to spend in the future and trying to live comfortably too. Many people try to figure out how to budget and save money at the same time for different reasons. One person may want to buy a home. You may want to pay off debts. Whatever the reason, saving money and living on a budget is doable. It’s even been done successfully by many Canadians. Here are a few tactics you can try:
1. Do some addition
Apologies to those who hate math. The first step in how to budget and save money involves taking a paper and pen and:
- Adding your monthly bills.
- Listing your monthly income.
- Estimating your discretionary spending.
- Coming up with amount you want to set aside to save money.
2. Create a household budget
Hopefully at the end of this process you have money left over to budget and save money. If you don’t, you’ll have to really create a tight budget. This household budget doesn’t include any of the unnecessary expenses like the multiple lattes you get each week or fast food meals. You don’t have to forego all the luxuries you enjoyed prior to making your budget. Just include a discretionary spending limit per week.
An example of a general budget includes the essentials like:
- Rent or mortgage.
- Electric bill.
- Water bill.
- Credit card bills.
- Emergency fund.
Your separate discretionary includes monthly extras like:
- Video game/ or movie rental.
- Restaurant outings.
Within that budget you have a savings goal. This goal must be realistic. For instance, you may want to save $1,000 in a 12-month period.
3. Pay slightly more than the minimum balance on credit cards.
You don’t want to fall behind on bills while you are working on how to budget and save money. Paying the minimum amount on your bills is definitely a way for that to happen. Even if it is a small amount of money, pay extra on credit card bills.
4. Choose one bill to pay.
You want to start with the smallest debt first. Aggressively pay the one debt until it is completely paid off. This way you are eliminating debt while saving money. After paying off each account, you may want cancel the account.
5. Create two separate accounts.
You don’t want to save your money by putting it under a mattress. Instead, open two separate savings accounts. One account is for your emergency fund. The second savings account is for saving money. If you can, have your employer place the money into those accounts each pay period so you don’t have to do so. Sometimes it’s a goal to put money away, but it doesn’t become reality because you intentionally or unintentionally spend the money.
6. Re-evaluate your savings and budget each six months.
You want to make sure you are on the right track on this savings and budgeting road. If not, re-evaluate to see if you need to make any changes.
7. Contact a credit counselling service.
Services like Credit Counselling Services of Atlantic Canada are available to help you figure out how to budget and save money. Counsellors will help you make a budget, pay off bills and save money.
How to budget and save money isn’t unattainable. You just need to focus on the task at hand. By the end of your budgeting and savings, you should be a pro!