Budget and Money Management Tips
Managing your money is like so many difficult chores in life: You would probably rather be doing something else, but it has to be done. Money management can help you reach your goals, especially the goal of homeownership.
Many find that a monthly spending plan, also known as a budget, is the best way to control spending and ensure savings. Not only will your monthly spending plan help you save for a down payment on a house, but it will also help you develop an ongoing savings habit that will come in handy for emergency expenses related to homeownership.
The Steps Involved in Developing a Monthly Spending Plan
Before you get started on completing a spending plan, discuss your financial goals with your family, or, if single, a trusted friend. Rank your goals in order of importance and try to agree on the top few goals you all intend to work on together.
The plan has a column for each amount you plan to spend and the amount you actually do spend each month. Meet your goals by trimming expenses. Decide on what you need for basic survival, in contrast to things you desire but can live without.
Use your plan as a guide, comparing the amount you have budgeted each month in each category with the amount you have actually spent. This will allow you to determine if you are over spending in some areas and need to cut back. Download Monthly Spending Plan.
Tips for Saving
Building a savings fund is an essential step to homeownership. Remember, the more money you can put down the less you will have to borrow. Here are some simple ways to save:
- Pay yourself first each month by having money automatically deposited from your paycheck (if your employer offers this feature) or directly from your checking account to a savings account.
- Save money that you receive unexpectedly, such as a bonus check, financial gift, or tax refund.
- Be careful about signing up for too many monthly subscription services. (Cable television, magazines, cell phones, Internet services). These expenses can add up quickly.
- Eat out less. Decide how many times a month you can afford to either go out to eat or order pizza, and stick to it.
- Make wise clothing purchases. You may be able to save hundreds of dollars by selective shopping in stores that offer good value at lower prices.
- Cut back on daily expenses, such as coffee, candy, soda, or cigarettes.
- Pay your bills on time.
- Avoid borrowing for items that do not provide financial benefits or that do not last as long as the loan.
If, after trimming your expenses and controlling your day-to-day spending, your income is not enough to cover your expenses, you should meet with a housing or financial counselor from a reputable nonprofit housing or financial education organization to work on ways you can change that.