Keep your expenses within recommended limits.
Sticking with a budget is far easier if you keep your expenses within recommended limits for your geographic area. Below are approximate guidelines from Money Management International, a non-profit credit counseling agency1.
Tips:
Here are some tips on how to use these guidelines.
Consider your cost of living.
You’ll notice in the related chart that some of the amounts have wide ranges to take into account the fact that the cost of living varies, and people’s life situations may be different. You may have to adjust the housing allowance upward if you live in a city such as New York or San Francisco, where costs are higher. Similarly, you may be able to revise it downward if you live in an inexpensive area relative to the national average.
Factor in your individual situation.
If you have a large family, your grocery bill may be more than it would be for a small family. To stick to a budget, you may have to pare back in other areas.
Look for ways to save in every category.
Even if you do live in a city where housing costs are high, you may be able to reduce them by refinancing your mortgage or finding a less expensive apartment.
Consider a change of lifestyle if it will help you reduce a sizable line item.
If both you and your spouse are self-employed and your health insurance costs are through the roof, it may be worthwhile for one of you to look for a full-time job with health benefits.
Look for ways to get the things you need without spending money.
Bartering is a big trend, thanks to the recession. If you are an accountant, perhaps you can do your hair stylist’s tax return. If you are a teacher, perhaps you can tutor a housing contractor’s child to pay for a small job. Use your creativity to think of cash-free ways to “buy” what you need. The best way to barter is with people you know and trust.
If you eliminate any category, such as debt payments, because of good financial habits, put the money into your savings. If you establish automated deductions from your checking account to your savings account, it’s likely you won’t miss the money.
Managing Credit Tip #7
Three simple ways to help get your credit history in shape: 1. Manage your budget; 2. Limit your debt; and 3. Always pay bills on time.
What's next? Stretching a paycheck
1http://www.washingtonpost.com/wp-dyn/content/article/2006/09/09/AR2006090900108_pf.html
