If you’re not a fan of the word budget, you’re not alone. For some, it conjures up a life of limits and deprivation. You work hard to make a living, and you deserve to treat yourself once in a while, right?
That’s where a spending plan (not a budget!) can help. When you plan ahead, both for needs and wants, you ensure there’s room for everything without building up debt or risking your financial health.
Try these five strategies to spend smarter.
1. Figure your discretionary income.
Add up expenses that don’t change: rent or mortgage, car loan, insurance, electricity and groceries (use an average cost). Subtract this amount from your monthly take-home pay. What’s left is your discretionary income – money to use at your discretion.
2. Look to the future.
Do you want to take a vacation this year? Buy new furniture? Pay off your student loans? Having big goals in mind will give you motivation to ...
3. Pay yourself first.
Financial experts recommend “spending” on yourself right away by putting money into your savings account with each paycheck. An automatic savings account like CU Thrive makes saving painless and rewarding. Learn more at www.hfcu.org/thrive.
4. List your needs and wants.
If your car is due for an oil change and it’s your child’s birthday, those expenses likely need to come ahead of other purchases. Spend wisely each month and try to avoid reaching for a credit card unless you can pay it off in full the following month.
5. Monitor your spending.
Part of spending wisely is tracking your expenses. Use your ATM & Check Card for purchases, Online Bill Pay for regular bills, and Popmoney to pay individuals. With one log in, you can see all of your transactions.