Its estimated that about 54% of people in this country live paycheck to paycheck and that 21% are having difficulties paying their bills, according to data from the LendingClub Corporation. And, if we were to check, the majority of them probably either dont have a budget or are not budgeting properly.
In most cases, people fail to stick to a budget because they lose track of their finances or make bad purchasing decisions. But they would be surprised how much of a difference a few adjustments could make to their finances. Here are three practical household budgeting tips everyone should follow.
Use Your Credit Card
This might sound counterintuitive, but using your credit card could actually help you stick to a budget better. For one, this will allow you to have a much clearer view of your monthly expenses, and, if you use the card correctly, it could help you build your credit. Not to mention that picking the right card could help you save money on things like clothing, gas, or groceries.
You just have to make sure that you have the discipline necessary to pay your balance in full every month. This is also a better idea if you already have good credit and its not your only card. Thats because maxing out your only card will send your credit utilization ratio through the roof and affect your credit score negatively. So, if you have more than one credit card, choose only one for spending (the one with the best rewards), and keep the other ones clear. Keep reading for some money management tips.
Scale Down on Your Food Expenses
People often joke that millennials cannot afford houses because theyre spending too much on Starbucks, and its not completely false. If you and your partner spend $5 a piece on coffee every day, thats about $2600 on coffee every year if we take out the weekends.
If you were to put this amount into a money account with a 5% return and let compound interest work its magic, this $2,600 could turn into $11,616.14 after 30 years. So, think about that next time you pay for grossly overpriced and often subpar coffee.
Instead of doing this, you could get great coffee at home simply by knowing how to pick coffee beans and learning the art of brewing a good cup. Or you could get premium k-cups like the ones Gourmesso offers. You could get top-quality coffee for as little as $0.39 per cup and the flavor will be indistinguishable from what youd get at the average coffee shop, only for cheaper.
There are tons of other ways that you could save on your food expenses. One of the best decisions you could make would be to invest in a chest freezer. This will allow you to benefit from specials on perishable items and buy in bulk. Try to avoid prepared products as well and see if you could make them yourself by using cheaper raw ingredients.
Keep Things Simple
One of the biggest mistakes people make when budgeting is making things way too complicated. You dont need to create a budget for every single spending category. You could have a budget for essentials like clothes, food, rent/mortgage, and transportation, and another one for everything else. Knowing that you have all the essentials covered will give you peace of mind and the rest of your money will go naturally towards the things that matter the most to you.
These are all things that you could do today to manage your budget better and improve your finances. It all starts with building a solid budget, so build one right now if you havent already.
