Trimming the Budget Fat

 You have just finished creating your budget.  You have a list of all of the money you have coming in and all of the money going out.  Uh Oh!  The amount of money going out is higher than what is coming in.  What can you do?  Sort out the Need from the Want and then trim the fat!

 First Steps to Take – Separate Needs and Wants:

First, separate your spending into two lists:  Need and Want.  Let’s consider the Wants as things that you can live without.  Prioritize that list of Wants so you can see what is most important to you.  We will put that list aside and see if we can trim enough of the Needs to bring back some of the Wants.

 The Needs are things that you can’t really avoid (housing, insurance, utilities, groceries, etc.).  I also sometimes call this the list of Have To Pays.  Be realistic and honest here.  Some of these expenses may be fixed (rent or mortgage).  Others may be a bit more flexible.  Look at those items where you can make some cuts.  Maybe you have some subscription services that you pay each month that you really don’t need.  If something is unnecessary or not worth the money eliminate it.  My favorite things to cut are unused gym memberships, magazines I never read, extra cable TV channels that I never watch.  See where you can substitute lower cost options or eliminate that item altogether.  Another way to cut the Needs is to look at how much you are spending on things like insurance, groceries and gasoline.  Shop around and see where you can get more for your money.  Also look at what you are buying when it comes to things like groceries.  Prepackaged food may be easy to prepare, but it is often more costly and not as healthy.

 **One tip – make sure to include a line (no matter how small) for savings.  You need to pay for savings like it is a mandatory bill.  That is the only way to make it part of your routine.

 Be Realistic:

Once you have trimmed the Needs down to a number that you can cover with your income see what you have left to spend.  But what do you do if your Needs list still exceeds your income?  Take a look at the Needs list again.  Be honest and realistic when looking at your spending habits and lifestyle choices.  You may need to make some sacrifices but they are well worth it.

Image Courtesy of Flickr: https://www.flickr.com/photos/nophoto4jojo/5651882751/sizes/z/in/photostream/

Next Time:  My Top Budget Trimming Tips.

Brought to you by Wendy Conte

Owner of Wendy Conte, CB ~ “We Do Books So You Can Do Business.”

(661) 993-9313  ~ wendy@bookkeepingscv.com