Saving Money With A Budget

Save money? Are you crazy? How can I have a savings program with the bills I have? Yes, you can with a little organization and some tips on how to begin.
There are four basic steps to implement a good savings program:
Record the withholding amounts taken out of your paycheck.
Each pay period, record on a computer spreadsheet or on an accounting ledger what each deduction is and the amount withheld. Some paycheck are the same each pay period and some change when work hours fluctuate.
This will make you aware of how much you're paying in income taxes, heath insurance, F.I.C.A., Medicaid, 401k , and other items on your pay stub.
You need to have a written budget.
This requires finding out exactly what is being spent for each category. Expenses can be divided into two categories.
1) Fixed, which are the dollar amounts that remains the same each month such as mortgage, insurance, car payment, spending money, and student loans.
2) Variable amounts change each month such as electrical, telephone, groceries, car gas, eating, eating out, gifts, and entertainment.
Over a three month period the amount you spend for each item will develop a range that can be entered into your budget. Always include a miscellaneous spending entry to pay for amounts not budgeted or a seasonal utility bill. Having fun so far? What does this have to do with savings? Hold on I'll get to that.
A record of where your money is spent.
One item that is hard to track is money spent by paying cash. Two good ways to keep a written record is by check or credit card. This will give you a monthly record of each entry to help evaluate where your money is going. The amount budgeted for spending money is the only entry that would not have a break down. Bank and credit cards are accessible on the internet so a current balance can be accessed on demand. This record will also be helpful when you are collecting deductible item for tax purposes. This can be the hardest part but it is a means to an end.
Evaluate the interest rates you have on your loan accounts.
This is looking at interest rates charged on credit cards, charge accounts, mortgages, second mortgages, car loans, and student loans. Is it possible to get a better rate? Are you paying too much for convenience? Could you change shopping habits to save on living expenses? Remember, when a dollar is spent, the dollar and all the future earnings are spent and gone forever. Is this dollar being spent necessarily, or would it be better to save it for the future?
With these four steps completed, we can begin to design a saving system that will met your goals and objectives. Now, comes the exciting part. Are you ready for this? Go outside and yell, "I can save money". Now you can be an investor. E-A101 635
More to come in the next Make Money Work newsletter.
To your financial success,
Martin Braddock