The first step for getting control of your finances is understanding where all of your money is going. We talked a few weeks ago about how to create a budget, but when you have multiple sources of income and several different kinds of bills (monthly, yearly, static, variable, auto-withdrawn, etc) it can quickly get out of hand. But, don’t stress. It isn’t as hard as you think.
When you start wrangling your finances, there are actually only a few different categories you should worry about. I recommend that you write them down as you go, and write out an estimate of how much you spend on each to get a feel for it.
Note: I’ve starred the ones that are optional or whose prices can usually be dropped fairly easily, so if you’re looking to spend less money, start with those and see where you can make changes. You may be able to consolidate, negociate less money, or remove them entirely
Utilities
These are usually fairly static expenses which makes budgeting for these pretty simple. Some, including phone, net, and cable can either be consolidated, dropped, or else compromised on to save money.
- Electricity
- Water
- Sewer / Trash
- Gas / Oil
- Cable/Satellite/Netflix/Hulu*
- Internet*
- Phone*
Housing
Obviously you have to live somewhere, so this static expense is pretty important. If you are looking to make cuts, shop around for more insurance quotes, or consider downsizing.
- Rent/House Payment*
- Home/renter’s insurance*
- Property taxes
- Miscellaneous expenses (lawn care, home maintenance, etc)*
Food
Also a necessity, this variable expense is usually the first place that most people cut, and it’s easy to save money on groceries. If it helps you, calculate your food expenses separate from non-edible items. Personally, I mix them together since I buy them all at once.
- Monthly groceries (including non-edible items)*
Services
These variable expenses seem not quite as important, and it can be tempting to cut them, but remember that insurance is only a waste until you suddenly need it. I recommend leaving these alone, for the most part, although you could easily cut out some of the extra personal expenses.
- Medical insurance
- Eye/dental insurance
- Life insurance*
- Animal services (vet bills, food, flea treatment)
- Personal expenses (haircut, new clothes, gym memberships, magazines, entertainment)*
Transportation
Whether you drive a car or take the bus, chances are you don’t live at your work. This is an expense most people overlook, but it’s definitely important. If you’re looking to save money here, make sure you’re not cutting it from maintenance, or you’ll soon find yourself with no vehicle at all.
- Car Payment
- Car maintenance (oil changes, new tires, etc)
- Car insurance
- Misellaneous Car expenses (new tags, parking fees, tax, etc)
- Gas*
Debt
Debt is, unfortunately, a part of life and although this is at the bottom of the list, make sure it isn’t forgotten. I suggest figuring out what the minimum is for all of these, and then budget slightly over it to start.
- Credit cards (list them separately)
- Student loans
- Medical bills
- Other loans and debt
Savings
Even if you can only save $20 per month, I recommend trying to set aside at least a little money for savings. You’ll be surprised how quickly it adds up.