smart spending

How to create a budget that works for you

Re-energize your finances
Re-energize your finances © Wavebreakmedia/Shutterstock.com

You've heard of it, and some of you have even tried it -- detoxifying or cleansing your body by going on a strict diet for a few days, drinking only juices or ingesting herbs.

Some people swear by these treatments that promise to help us lose weight. Some folks even say they feel re-energized and fresh after going through such a regimen. But have you tried to detoxify your budget, getting rid of all the bad stuff that weighs you down financially and prevents you from achieving your financial goals?

Here's what experts say about how to detoxify your budget and put your money to work for you.

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Sometimes, people cleanse their body by going on a strict diet, but you can also detoxify your budget.

Start by creating a basic budget with three columns for what are necessities, necessities with wiggle room and lastly what's discretionary. Then, organize each item of your budget into one of the three columns.

For example, your rent, mortgage and car payments would go under necessities. Utilities and food would go under column two. You need them to live, but you can try to reduce those expenses.

Column three, or discretionary expenses, might include entertainment, travel and hairstyling. Use your bank's bill-pay service and those by utility and cellphone companies to make automatic recurring payments.

For savings, use your bank's fund transfer service to set up automatic recurring payments to a savings account. For other expenses like gas and groceries, leave money in a checking account and access it via debit card so you don't have to carry cash in your wallet.

 

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