Five of the Best Budgeting Tips to Save Money

Feb 24, 2015 -

Not enough money? Learn to budget the right way.

When you budget, you are asking yourself to spend no more than a specified amount typically on a per month basis. How much money you bring in will play a part in determining how much you should be spending on shelter, food, and personal activities/products.

The first step towards setting an attainable and realistic budget is determining your spending baseline. Gather all of your credit card and bank statements and categorize all of your spending for the last six months. Once you have all of that organized you can start setting budget targets.


Suppose you already spend $200 on gas a month. The primarily contributor to your gas spending is fuel for your commute to work. In order for you to make money, you will need to drive to work. Therefore, to set a budget of $100 a month on gas is completely unrealistic. Unless you can start taking public transportation or ride your bike to work, you are better off cutting your spending elsewhere.

Now let's say you currently spend $200 a month on clothes. Yes, you do need wear clothes when you go to work. But after a certain point buying new clothes becomes a luxury. Therefore, there is without a doubt room for you to cut back in this category. Start small and cut your spending by 25% or $50 if you are spending $200 a month. Then work your way down to $100 or even $50. There is no sense in trying to flip your lifestyle upside down in one fell swoop.

Here are the categories you should consider when setting a budget.

1) Shelter
One of the biggest pieces of your budget will be shelter. Without shelter you might as well be homeless. If you live by yourself, there is absolutely no need to live in a three bedroom and two bath condo. In college, we shared rooms. That may be a bit extreme now that you are a working professional. If you work in the city, consider living in the suburbs. You can typically find less expensive rent the further out you are from the city. But, don't go too far otherwise you will find yourself with a longer commute. Find a group of friends and split the rent on a bigger place. On a per person basis, that will be much less expensive for all than if everyone were to get their own one bedroom place.

2) Food
While you want to save money, you also want to eat food that is nutritious and delicious.
Cooking for yourself is time consuming, but is also one of the best ways to learn a new skill to impress your significant other. There are a number of great cook books you can get started with including The Complete Cookbook for Two and Thug Kitchen: The Official Cookbook: Eat Like You Give a F*ck. Listen, you don't want to be eating McDonald's all the time. Even if it means only spending five bucks on lunch or dinner.

3) Personal
You are young at heart and want to live life. Suppose you want to the latest technological gadget or spend a day at an amusement park. Whatever the case may be, you should set aside an amount each month for you to have fun with. Call it the personal fun fund. This category usually provides the best opportunity to cut spending. Yes, you might need to tone down your lifestyle a bit, but you can be smart about it. For example, instead of spending $20 on a haircut, look around and see if  you can have a barber cut your hair for less. Alternatively, consider cutting your own hair.

4) Clothing
The best way to save money with clothes is to buy on sale. Often times, stores will have winter clothing on sale in the summer and vice versa. They are still the latest fashions, but stores are looking to clear out clothes in stock to replace it with new inventory. That is when you swoop in and pick up these great deals. Listen, you can find similar pieces of clothing in major department stores as most specific brand stores such as Banana Republic or Kenneth Cole. Nobody is checking out the tag on your shirt. The other day I spent $85 on a suit that was originally priced at $350 at Macy's. My friend thought I was wearing a $400 suit! Expensive doesn't necessarily mean good.

5) Retirement
One day you will want to retire. In retirement you pay yourself to do what you truly want to do in life. Let's face it, most people work because they earn money from it. Not because they enjoy it. Sock away a portion of your income in a Roth IRA or 401k. You'll thank yourself that you did when you get closer to 59 and a half. Saving at least 10% of your income is a good start. The more you save now the better you will be in the future. Do yourself a favor and learn to invest.

Budgeting is not difficult, though it does involve discipline. We've laid out a number of top tier budgeting tips to make budgeting easy as pie. While you can't always have what you want, we can help you get what you need.
 
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