How to Stay on Budget

It’s hard to stay on pace, especially when you don’t have a roadmap

By Bernard Freeman

Budgeting helps give us a clear idea of how much we’re spending, and where. That makes it easier to properly portion out your hard-earned salary. Creating a budget makes it clear where smart cuts are needed, what’s costing you more than it should, and the amount you’ll need to put aside to meet all of your obligations.

WHY IT’S SO IMPORTANT

There will always be surprise expenses, as when an appliance or vehicle breaks down. Changes at work may also have sudden impacts. But more often than not, we have money issues simply because we’re not keeping a close enough eye on the specifics of our spending. Budgets make clear how much you have coming in, and how much you have going out. You may find almost imperceptible changes in expenses become apparent simply by writing it all down. Getting your cost of living under control can lead the way to increased savings, so you’re better prepared when the unexpected happens.

MAKING SMART CUTS

Once you’ve begun to regularly spend less than you earn, the nest egg that you’ve long hoped for will begin to grow by leaps and bounds. To get there, you may have to make some notable cuts in discretionary spending. Begin by adding up your regular income and then balance that against what you owe, keeping in mind that this should include rent or mortgage payments, a car payment, groceries and gas, and regular insurance and utility bills — but also the money you spend on extras that may be unneeded. You may find that it makes sense to alter a few lifestyle choices in order to more quickly build up your savings.

STAYING CONSISTENT

Making these small cuts, even if just for a few weeks or months, may quickly put you back on track. In cases where someone has fallen very far behind, it could take longer. The key to success, however, is sticking with the plan. Even putting away just a handful of dollars each day can end up making a huge difference with your long-term goals. Keep at it, and a well-deserved trip or major purchase might seem suddenly within your reach again. Over time, you may need to revise the budget to take into account the goals you’ve met or are still pursuing.

Benefits of Online Billing

Avoid damaging your credit by missing a payment through the mail

Slow payment for bills can have a huge impact on your buying power by damaging your credit score. In some cases, you might even face termination of services. Technology can help ensure that you never forget, while also avoiding the risk of something getting lost by the postal service while in transit.

HOW TO BEGIN

Different companies have their own processes, or you may choose to set up an online bill-paying hub through your personal financial institution. Either way, you’ll gather together all of your bills so that you have easy access to account numbers and other required information. Banks will require the biller’s details. You’ll include your own information if setting up payment schedules through individual company sites.

ANALYZE YOUR SPENDING

Automatically deducted payments can help you analyze your spending, and they can also help you maintain a budget. Many online bill-paying services provide tools so that you can track spending. This allows you to determine exactly where your money is going and when, providing vital information on how to cut expenses. You can also keep an eye out for increasing costs as they happen.

SETTING A SCHEDULE

Everything is easier through these online scheduling services, whether you’re dealing with a one-time only payment, monthly installments or annual responsibilities. Of course, there’s some front-end work involved with setting everything up by date and amount. But once you’ve set the schedule, your payments will begin to flow to their intended accounts like clockwork.

You can even set them up to pay extra in order to chip away at debt more quickly. Meanwhile, you never have to remember to pay again, and payment will always arrive before it is past due. This can be particularly helpful with longer-range payments like club memberships or annual subscriptions which are more easily forgotten.

REAL-TIME BENEFITS

Identity theft has become a pervasive issue in the internet age, as tens of millions of Americans fall prey to unwanted intrusions each year. Online bill-paying services will typically provide a notification system, either by email or text, that alerts users when payments have been made. They also offer updates on your available balance and on any suspicious transactions. Users can then quickly suspend accounts to limit the damage these hackers might do — a real-time benefit that has made a huge dent in losses due to identity theft.

ADDED BENEFITS

Beyond helping keep payments up to date, online banking makes creating and maintaining a budget so much easier. Financial institutions and other bill-payment services might even provide additional tools to help track income and spending. You’ll get a better idea of how you’re doing financially, and on a real-time basis. Areas to save will be right at your fingertips should costs begin to creep up too far.

Set up a two-factor log-in system and you can also guard against identity theft, since you’ll have to enter a password and then a special code that’s texted, phoned or emailed to you in order to access the page. The same system typically provides real-time updates on large or unusual transactions, allowing you to approve purchases if they’re legitimate or to quickly suspend your account to stop a hacker in their tracks.