Budgeting Tips for Easier Bookkeeping
Credits: Personal Income, Dividends, and More
Credits are considered the cash flow that comes into your home or business. The funds usually come in the form of employment income. However, there are several types of credits including dividends from investments, child support or alimony payments, windfalls and gifts, extra income by way of a second job, selling personal items, or inheritances.
Add up your credits so you know what you are able to save and spend in a single month. As a general rule, if you come across a windfall like a winning lottery ticket, or a cash gift, save one third, pay extra on your debts with one third, and feel free to spend the final third on something special for yourself or a family member.
Debits: Household Bills, Debt, Spending, and More
Your debits are much more than you realize. Your living expenses and debts are not the only thing you need money for. It’s important to budget items such as annual vehicle registration, new or replacement work attire, vehicle maintenance, and entertainment costs. Add up and prioritize your debits.
- Pay yourself first. This means to deposit the allotted amount of income into your savings account, investment account, or put the cash under your mattress.
- Pay your friends and family if you have a payment arrangement with them. Personal loans and mortgage holding are examples of reasons you would need to make payments to them.
- Your household bills are your next priority. Your rent or mortgage is usually the largest expense, and above all you need a place to live. If at all possible, occasionally make an extra mortgage payment to reduce the amount of interest you will be paying in the end. Make sure there is no pre-payment penalties before you do so.
- Food is a necessity, so obviously that expense is a high priority item.
- If a car payment is necessary to keep yourself accessible to transportation, by all means, pay that bill next. In most cases, you need transportation to get to and from work.
- Insurance ownership is required by law in most states, so be sure there are funds for that expense.
- Believe it or not, things like electricity, internet capability, cable TV, and cell phones are luxuries. Under certain circumstances, as in medical concerns, electricity and cell phones may need to be moved up on the list of priorities.
- Other debts, loans, and credit cards should be last on your list of priorities. However the wise person will stay out of debt as much as possible. When in debt, try to pay as much as you can, and always pay at least twice the minimum payment to reduce the amount of interest you will end up paying in the end.
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How to Balance Your Budget and Save
The key to balancing a budget is to reduce unnecessary spending of the credits in order to be sure there are enough funds to pay the debits. It is really quite amazing the amount of opportunities you have to cut spending for the purpose of saving money.
Check into insurance discounts. Some companies give multiple car or policy discounts. Some companies give Military discounts. Some companies give discounts to Automobile Association of America (AAA) members. Many companies also give discounts for safety equipment on vehicles. You may want to reduce your insurance premiums by increasing your deductible or lower your coverage if need be.
Cutting back on Cable TV is another way to reduce spending. Is it really necessary to have a package with hundreds of channels?
Groceries can be much more inexpensive if you watch the sales each store has in their weekly flyers. Coupons are a great way to save, as well. There are several coupon apps for smart phones and many online websites that offer printable coupons. Buying store brands in many cases will save you a bundle compared to always buying name brand items. If possible, buy in bulk when you find a great sale on non-perishable items.
Save on your electric bill in the summer by setting your thermostat just above your completely comfortable temperature and utilize fans for circulation. In the winter, wear socks, sweat pants, and long sleeves to stay warm. Keep lots of blankets handy as well. Be sure your home has great weather stripping around all windows and doors so that the cool or warm air doesn’t escape.
Subscriptions can be cancelled also. Small amounts add up, so if you aren’t enjoying that monthly magazine, cancel the subscription. There are many credit card companies that offer great “clubs” to be in for a small fee. Eliminate those small fees and save a bundle.
Thank you so much for reading my hub, and I hope the read was helpful and entertaining. Please leave a comment, suggestion, or constructive criticism in the comments section below. I would greatly appreciate your input.
"Be kind to one another" ~ Ellen
God Bless You ~ Margaret Sullivan
Marcy Goodfleisch from Planet Earth on June 23, 2012:
Your points about cutting back on some extras are so true - I was able to reduce my cellphone bill by nearly half when I cut out things I didn't need or use that often. Great information and tips! Voted up and up!
Dianna Mendez on June 16, 2012:
All good and so useful information on budgeting and accounting spreadsheets. I could use this as a refresher course.