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Financial Tips

How to Save Money : Take Control of Your Household Budget!


There are two critical first steps for anyone interested in getting their finances in order and engaging in some serious debt management. First, create a household budget. Second, get control of the plastic.

Create a Household Budget

Every household, no matter the income level, needs a budget, because knowing where your money comes from and where it goes is crucial information.

Look at your monthly expenses, write them down and separate them into categories.

Fixed expenses are typically long term and stay the same from month to month. These would usually include mortgages and car payments.

Variable expenses are expected every month but change somewhat. This includes most of your expenses, from groceries to utilities and credit card payments.

Periodic expenses do not occur every month – for instance, doctor visits and birthdays.

Once you’ve listed all your expenses and categorized them, start setting appropriate goals for your spending. You should be spending about 30% on housing and 20% on food – together, about half of your monthly household budget. Personal debt, such as credit cards, should not consume more than 15% of your income. Another 25% should cover transportation, utilities, insurance, clothing and health. Finally, and this is often the hardest, always try to put about 10% of your income into savings.

A household budget is a work in progress. You’re going to make mistakes. Accept them and keep working toward your goals.

Get Control of the Plastic

Credit cards are convenient (too convenient, usually) and they can help build a good credit record. But every time you swipe one at a store, it’s exactly like punching a hole in your bank account where the money starts trickling out in interest charges. You can put that money to better uses.

Save money, and your budget, with these tips:

  • Shop only with a list, and know what you truly need.
  • Take enough money for the items on your list.
  • Show your family everything you’ve bought. Make a habit of this, and you’ll be less likely to buy things you feel guilty about.
  • Try not to shop with people who will encourage you to spend. You know who they are.

These are only first steps, but they’re important ones. Debt management is a challenge, but if you keep your long-term goals in mind, you can find the motivation you need. If you feel you need more help, the consumer credit professionals at Credit Counselors can assist you in setting up a household budget and getting control of your finances.