Control your Monthly Budget - Uncover Credit Building Power

If you have recently graduated from college, just accepted your first job, rented your first apartment, or plan to purchase your first house, it is to your advantage to have control over your household budget. Below is a list of suggestions that you could use to create a household budget that will allow you to save money for emergencies, reduce debts, or use for the down payment on a house. Individually these money-saving tips are not life-changing, but if you implement a few of these in your monthly budget, the savings could be significant. After you review the list of money-saving suggestions, just implement the ideas that make the most sense to you and your household. In no time at all, you will be saving more money than you thought possible. Without making radical changes to your household budget, you should be able to make your budget more manageable and reduce financial stress.

To create a household budget, you should write out a list of all your monthly expenses. Go through your checkbook and credit cards receipts for the past three months to find out how much you are spending on average per month and what you are spending your money on. Then, create a budget that you can live with that limits your spending and lowers your expenses. Part of managing your budget should be tracking your expenses, this will help you realize what expenses you need and which ones are frivolous. Over the first few months you will need to make adjustments to your budget and eliminate unnecessary expenses.

The following suggestions are specific tips to save money:

• Open a Savings Account - Part of your new monthly budget should include savings. Whether you’re able to save $10 a month or $1000, it is important to save for future expenses, such as: special purchases, holiday spending, and emergencies. Using your savings for these expenses will help you to avoid using credit cards and creating additional debt. Watching your savings grow will help you keep focused, excited about savings, and protect your budget from unforeseen expenses.

• Bank Fees and Special Perks - Review your last three months bank statements and find out if you are paying any monthly fees for your checking or savings accounts. If you are paying any banking fees, you should research and compare offers from other banks for free checking and savings accounts. There may be certain requirements for free accounts, as well as possible other benefits, such as: cash back, new account bonus deposits, or other rewards.

• Credit Cards - If you carry balances on your credit cards, you should review your last few statements to compare the interest rates and the actual amount of interest that you paid. Add up the interest that you paid on all your credit cards last month and multiply it by 12. Eliminating the interest expense from your credit cards will free up money that could be used towards: vacations, savings, or home improvements. One of the first things you should do with your new household budget is to try to eliminate credit card balances. If you have large credit card balances, you should be able to save a significant amount of money by consolidating the debt into an installment or home equity loan with lower interest rates.

• Utility Bills - Contact your local utility companies and ask them for a free energy audit. The information you receive from the audit may help you find easy and simple ways to save money on your utilities. Some of the suggestions may include: weather proofing your home, sealing holes or cracks near windows and doors, buying a programmable thermostat, or tuning up your furnace and/or air conditioner. These inexpensive suggestions may significantly decrease the amount of your air conditioning and heating bills.

• Shopping - One of the biggest expenses households do not anticipate is impulse buying for instant gratification. Whenever you buy a big ticket item, it is in your best interest to thoroughly compare and research offers. If possible, you should give yourself a minimum of two weeks to research any major purchase. This will allow you enough time to thoroughly compare prices and warranties. Sign up for store reward cards, use coupons, and seek out money saving promotions. Many grocery stores offer discounts to their reward card customers as well as rewards towards other purchases such as gas. Prior to shopping, always write out a shopping list and stick to it. Many individuals make impulse purchases of unneeded items and regret their purchases later.

• Insurance and Mobile Phone - Review your most recent insurance and mobile phone bills and compare the rates that you are paying against other current offers. If rates have gone down, you may be able to save money on both of these expenses. Call your insurance agent and verify how much you could save by raising your deductible.

• Cable Bill - Review your monthly cable bill. Do use all the channels that your subscription allows. Would you be able to downgrade your service and lower the cost of your monthly subscription?

• Mortgage - What is your current interest rate on your mortgage? Are you paying a monthly private mortgage insurance that you could eliminate? Contact your mortgage lender and compare your payment and interest rate to what is currently being offered. You may be able to reduce your payment or reduce the term of your mortgage and save interest monthly or interest over the life of the loan.

• Entertainment Budget - Most people have no idea how much they actually spend on entertainment dollars. Track your entertainment expenses over the next 30 days. This should include the cost of lunch, dinner, and going out with your friends. After you have tracked your entertainment expenses for a month, you should be able to create a weekly or monthly entertainment budget. It should allow you to continue your normal routine, but control unnecessary spending. Instead of always going out with your friends, invite them over occasionally. You could make dinner, play cards, or watch a rented movie. This should create a significant amount of savings.

There are countless ways to lower your expenses and save money.Implementing just a few of the suggestions in your monthly budget will help you gain control over your income and expenses and will help you save money faster than you thought possible. 

Michael Zuren, PhD

I have 25 years experience in the mortgage banking industry. My experience includes the following loan types: (1) HomePath, (2) OHFA, (3) FHA 203k, (4) VA, and (5) USDA financing. I have been serving Cuyahoga, Lake, Geauga, and Ashtabula counties in Northern Ohio... more