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Regardless of whether you are employed or unemployed, it is always prudent to administer sound budgeting practices
in your household. Failure to do so, can lead to financial insolvency, should you become unemployed at some juncture.
It is important to recognize each and every expenditure that you pay out every month, and it is also equally important
to recognize every revenue source that you have each month. The amount of monthly revenue minus the amount of monthly
expense yields either a profitable cash flow (money you are saving every month) or a negative cash flow (money lost per
month). It is critical that you set up a detailed budget to determine where you stand on a monthly basis, and based
on this, come up with a budgeting tips plan to achieve a positive monthly cash flow.
Budget Revenue Items
The following items are sources of revenue that should be tracked each month:
- Any jobs that you have
- Any side jobs that you have or freelance work that you might perform
- Interest Income (from bank accounts, for example)
- Dividend Income (from stocks, for example)
- Pension Income
- Rental Income (if you rent out a house or condominium, for example)
- Social Security Income
- Unemployment Insurance (temporary)
Budget Expense Items
The following items are typical household monthly expenses that should be tracked each month:
- Automobile Financing
- Automobile Gasoline
- Automobile Insurance
- Automobile Maintenance
- Bank Fees
- Cable or Satellite TV
- Land Line Telephone Service
- Cellular Telephone Service
- Charitable Donations
- Education expenses (including loans)
- Home Electric and/or Gas
- Home Fuel Oil
- Homeowners Insurance
- Internet Service
- Lawn Care
- Life Insurance
- Medical/Dental Costs (including insurance)
- Miscellaneous Items
- Newspapers and Magazines
- Organizations or Clubs
- Renter's Insurance
- Real Estate Taxes
- Umbrella Insurance
- Water Service
Budgeting and Money-Saving Tips
Here are some very handy budgeting and money-saving tips, that will help you trim your monthly expenses, increase your monthly take-home
pay, and help you achieve a positive monthly cash flow. You will be amazed how much money can be saved on a monthly basis, by implementing
some of these handy suggestions:
- Condition yourself to not spend needlessly. This means to live below your means, never buy on impulse, and make sure you use things
up before buying replacement items.
- If possible, always own your home, rather than rent. The tax deductions and equity gain over the long haul, make owning more favorable
than renting. However, it is key to make sure that you do not get saddled with an overbearing mortgage; only purchase what you can afford.
- Have your checks directly deposited to interest-bearing accounts, rather than zero-interest based checking accounts. Although interest
rates are extremely low currently, it is better to earn interest on your money, rather than not. Only transfer money to your checking account, when
bills need to be paid.
- Defer bill payments until the last day of the month. Keep your money in interest-bearing accounts, as long as possible. However, make
sure that you will not incur any late-charges for certain vendors (like credit-card companies). If so, move the payments for these types
of vendors up a few days.
- Make use of your bank's free online bill paying service (if available), to save on monthly bill postage costs.
- Make essential purchases online wherever possible, particularly to out-of-state vendors that will not charge you sales tax. The sales tax
and gas savings will add up.
- Make use of food coupons, at the supermarket, whenever possible.
- In supermarkets, avoid name brands, and purchase store brands instead, which tend to be cheaper.
- Shop at food superstores like Wal-mart, where
great savings can be achieved.
- If you use prescription drugs, ask the doctor or pharmacist to order generics, which are significantly cheaper.
- Make vacations local, rather than distant and expensive.
- Never run up credit card debt - minimize the use of credit cards, unless you always pay them off at the end of each month.
- Use cash-back credit cards for all your purchases, to receive cash-back rewards. However, make sure that all of your credit card
expenses are paid immediately, and that you do not incur any kind of interest charges - this defeats the purpose of the cash-back.
- If possible, combine your cable television, internet access, and telephone service under one carrier, to minimize cost.
- Do your own taxes, to save money. Use of proprietary software products to accomplish this will save you the cost of an accountant, and very
often find you deductions that you didn't know about.
- Take losses on year-end investments that aren't working for you. Under current tax law, you are able to write-off up to $ 3,000 in losses per
year (with the excess carried forward to future tax years).
- Always purchase term-life insurance, as opposed to whole life insurance policies. You can read about
Term Life Insurance on our website.
- Raise deductibles on homeowners and automobile insurance policies to the maximum. Unless you get in frequent accidents or put in frequent
claims, this will significantly reduce your premiums, and save you money over the long haul.
- If your firm permits, make use of FSA
(Flexible Spending Accounts) for your medical and dependent care expenditures. Money allocated to FSA accounts are fully tax deductible.
- Contribute to College 529 plans. They are a
great vehicle for college savings, and are state tax-deductible.
- Send your children to State Universities, instead of Private universities. State schools offer a much-better cost savings, and are overall
a much better investment. If at all possible, try to have your children graduate from college, debt-free.
- Make sure that you record (and get receipts for) your bonified charitable deductions. These are all tax deductible.
- If employed, contribute the maximum amount you can afford to the company's 401K plan (if you are self-employed you can contribute to a solo 401K or a Keough plan). The amount contributed to such
plans, up to a federally-defined limit, is tax deductible, and can significantly reduce your tax burden.
- Use energy-efficient light bulbs in your home.
- If working, avoid buying lunch at work; always bring your lunch.
- Never use ATM cards out-of-network (this incurs charges).
- For investments, use a discount broker, as opposed to a full-service broker. This will save substantially on trading commissions.
- Use cash-back credit cards, wherever possible. In times of high-gasoline costs, consider using the credit cards offered on the
Gas Rebate Cards website.
- Always use banks that offer free checking.
- If you buy a car, buy a fuel-efficient car.
- Install a smart thermostat in your house, to control heating and cooling.
- Replace shower heads with low-flow models.
- If you have a water-heater in your home, turn the temperature gauge down to 120 degrees.
- If you have a mortgage, look to refinance it, if you can reduce your rate by at least 1 % or more.
- Consider having your hair cut by someone you know, or frequent a no-frills barber, as opposed to using an expensive hair salon.
If you are looking for additional reading on the subject of budgeting, you may want to browse through our
Budgeting Books Store.
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