In the world we live in today there is a lot we cannot control. It is human nature to want that control to feel grounded and secure. Today’s climate offers an opportunity to take control of certain aspects of your life; one of those being your spending habits and your budget. I wanted to provide a few insights on budget adjustments you can make today to take control of your monthly financial picture:
2)Need vs Want
3)Everything is on Sale
1) Know Yourself
First, if you do not have a monthly budget, you need a system. There are hundreds of options out there for tracking your monthly expenses that range from spreadsheets, to apps or even cash envelope systems. What is important in budgeting is knowing how you and your family will best operate to understand and control that budget. It is important in choosing the option that best works for you that you find it easy to use and understand. A budget should not feel like a punishment, but act as guide to understanding where your money goes. You first need to provide your spending information to know how much you are spending. Often spending is underestimated because just the necessities are considered. This will act as the starting point to setting up parameters for your spending. Today’s applications are very intuitive and can help to set up your monthly budget.
2) Need vs Want
The first aspect in setting up your budget is figuring out your monthly necessities. These are mortgage/rent, cable and internet, cell phone, home and auto, utilities, HOA, etc. Next add in food cost, meaning groceries. These are your needs. The bills to pay and the mouths to feed. From there with what is left over comes the discretionary spending. A budget needs to have room to live life and enjoy it to the fullest. These things are shopping, eating out, charitable giving, vacation, etc. It is important to track this discretionary spending as it is the one that often causes overspending. These are the things you want but may not necessarily need. To be truly within a budget it is important to not spend more than you make in cash flow in a month.
A Guide to Updating Your Budget in Uncertain Times
3) Everything is on Sale
As current spending looks different with things like gas, eating out, entertainment and such not happening it is easy to fall into the trap of online shopping. As I said, everything is on sale right now to encourage spending. My advice is be careful! If there is a good deal on some patio furniture you have been eyeing and your yard needs it, great! If you are shopping just to shop that 40% off sale and do not necessarily need it, this is where you can get in trouble. If you have the extra in your monthly budget to do a little retail therapy stick to a hard and fast amount that you will not go over and shop that sale. We all need a little enjoyment in these times so just have a plan and shop responsibly.
Now is a time for self-reflection into any auto pay subscription services you may have. Do you pay quarterly for a box of beauty products that you never use? Do you have a workout app that your card gets charged for monthly that you never use? We all have these services that are now lingering in our bank account and wreak havoc on a monthly budget. Take the time to evaluate if something serves you or cancel it and free up some cash flow. While $12 a month doesn’t seem like a lot; say you have 4 different subscriptions charging that amount between workout apps and streaming services, that is $578 a year you could be saving.
Some final thoughts to help you with budget adjustments:
-Make sure you are not overpaying for things like cell phone plans or cable/internet. Look at other providers or call your current provider to see what they can do for you.
-As we are not spending on items such as gas, entertainment and eating out, look at increasing your cash savings or paying down high interest debt.
Written by Alexa Brascetta Wealth Advisor, Valorem Financial A Colorado native, raising two daughters and two dogs with a husband who is in law enforcement. A lover of the Denver Broncos, Rockies and Avalanche, with a true appreciation for all the great weather and activities the great state of Colorado provides. However, a true passion is traveling both domestically and abroad.
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