Money Tip #3

Setting a monthly budget is a great way to track how much money you spend each month. Some people have budgets, but by keeping tabs on every penny you spend makes even more of a difference. I separate our expenses into categories: House (mortgage, utilities, phone); Car (payment, gas, insurance); Misc. (cell phone, preschool, dance, etc); and Loans (school, credit cards, medical bills, etc.). These payments rarely change, so there isn't much room to improve upon them unless you drop your cable or refinance, for example.  Next are the expenses you can change: groceries, eating out, personal stuff, entertainment, etc. Try and decide what you think you spend a month or a week on each. If you know you are overspending on these things, this is a great time to discipline yourself and bring that spending down.  These are the things that I like to use cash for. I like to use a coupon binder and label each category. I then put the amount of cash I think we will use each month or week for each. When the money is gone, do not spend any more or you will go way over budget. This can take months to master, but will be well worth it in the end. I also leave another miscellaneous category for things like birthdays, Christmas, clothing, etc. I created my own spreadsheet in Microsoft Excel to track our expenses. Next you need to add up all of your expenses. Then add up your monthly income. Subtract the expenses for the income. Hopefully you have a positive. If you don't, you need to reevaluate your spending and make some cuts.