Sorting those expenses into needs and wants can help you organize your budget and prioritize spending, especially if you need to trim costs to make room for savings or debt repayment. These are the expenses you cannot avoid. Necessities often include the following:.
Property tax if not already included in the mortgage payment. Electricity and natural gas. Groceries, toiletries and other essentials.
Special meals in steaks for the grill, etc. Travel expenses airline tickets, hotels, rental cars, etc. Self-care and personal grooming, like spa visits and tips for your hairdresser. Budget tip: Scan your spending for the past few months to get a sense of what your wants are and how much you tend to spend on them.
Have each adult in your household do the same if you're creating a family budget. This exercise gives you a realistic baseline. It also includes anything over the minimum payment on your "good debts" such as your student loans and mortgage.
Credit card payments see budget tip below. Budget tip: If you pay off your credit cards in full each month, classify the expenses according to what you buy — groceries under needs, for example. However, if you maintain a balance and are accruing interest and fees, list payments beyond the minimum under debt repayment. Every few months, revisit your budget and adjust as necessary.
Use a budget app to track your expenditures, saving time as you build momentum with your new budgeting habit. If you get stuck, try these budgeting tips. In some cases, you might be able to work with the company and come to an agreement about your bill or get help paying the bills based on your income. It never hurts to ask if there are payment programs available, or if you can work out a payment plan during a period of financial difficulty. Programs such as LiHEAP provide financial assistance to households that earn below specific amounts and who need help paying their energy bills.
You can also look for ways to reduce your variable expenses each month if paying your fixed bills becomes a challenge. One of the first places to look might be at your grocery spending.
While food can be expensive, there are also lots of inexpensive, healthy options available. When things are tight, you might switch from fresh vegetables to frozen, which are just as nutritious and cost less.
You might also consider making more meals based on beans and whole grains and reducing the amount of meat you eat. Aim to pay the bills by their due date, but make sure you have the funds in your bank account first. Many companies are happy to change your billing schedule if it means you are more likely to pay by the due date. Arranging your bills so they are all due at the same time each month also helps streamline your process and can make you less likely to overlook a bill or miss a payment.
A variety of money management and budgeting tools are available to you, many of them for free. From creating a spreadsheet to setting up online bill pay, here are a few tools to use to help you manage your bills. As you get in the habit of scheduling bill payments and get better at managing monthly expenses, the following tips will help you master your money and the bill-paying process.
Disorganization can get in the way of timely payments. If you often find yourself scrambling to find a bill or are unsure if something got paid, it can be helpful to carve out a physical space where you take care of all your bills. Even if you get e-bills, you might find it easier to have a physical, printed copy of each bill. Keep bills in the same spot, such as a filing cabinet or a basket on your desk.
Once a month, sit down and sort through the bills. Either pay them or mark them as paid if you use online bill pay and record the payment on your spreadsheet or budgeting app.
Then, file the bills away so that you are ready for the next month. Some expenses only come up once or twice a year or quarterly. Your auto insurance payment might be due every six months, or you might need to pay membership dues to an organization once a year.
Irregular expenses have a way of surprising people. A simple way to handle those non-monthly expenses is to figure out how much each one costs each month and treat them as monthly expenses. More and more people are using cards to pay for purchases. Between and , the number of card payments increased by 7. Or, better yet, start paying your bills as soon as they arrive. Not only are late-fees crazy expensive, but if you regularly miss due dates, you could be crippling your credit score.
Paying a bill late, even if only by a day or two, makes it more expensive to borrow money when you want to finance a car, house or some other major purchase. Look out for your future self by paying your bills promptly. Answer a few of these questions before moving out for the first time:. A budgeting app can help you.
An emergency fund is money you can use if you have an immediate and unavoidable expense, like a broken-down vehicle or medical costs. For example, you and your roommate might be able to split rent and utilities bills. Make sure you have money for these costs before you move out. You should include new furniture as a one-time living expense on your budget.
You can add cozy sofas, tables, and chairs later. In order for a budget to work, it has to account for everything you spend money on. This includes little things like parking lot fees, late-night drive-thru meals and random convenience-store purchases.
Like to rent movies on the weekend? Add it to your budget. Tend to drop a few bucks on mobile apps or lotto tickets each month? Include those as well. Those living away from home for the first time are bound to face a flurry of unexpected expenses during their initial months of independence.
Netflix and Spotify subscriptions are also often overlooked, as are annual bills like vehicle registration and tax preparation. Here are a few basic ways to cut back on expenses during your first years of independence. Cooking your own meals on a daily basis can save you more money than just about any other change in your behavior. Knowing how to make five basic meals say, chili, tacos, chicken and vegetables, spaghetti with marinara sauce, and a slow-cooked roast with veggies , and having a microwave handy for reheating leftovers, can cut your food expenses in half.
An added bonus: Homemade food is almost always healthier than prepared meals. And consider getting a programmable thermostat to keep heating and cooling costs down. Only carry one credit card, and commit to only using it in absolute emergencies.
Using cash or a debit card for day-to-day expenses prevents you from overspending and accruing budget-busting interest charges. Consider all your transportation options. Do you really need to drive everywhere, particularly if you have to pay for parking once you get there?
And with Uber, Lyft, Car2Go and other ride-sharing services now widely available, city dwellers might even consider ditching their cars completely.
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