How to Stop Overspending and Stay on Budget

With the economy not doing so great, there are more people paying attention to their monthly spending. They are asking questions, keeping track of spending and trying to figure out ways to cut costs in order to save money. The best way to stay on top of your money is to figure out where your money is going and get rid of unnecessary expenses. These are tips I follow and recommend to many people. This is a system that has worked great for me and allows me to save over $500 per month.

Create a list of expenses. Most people can name their major expenses. It is the little items that drain your wallet every month. In order to get a true reading of your spending, you should write down every penny you spend during the course of 1 or 2 months. You should keep track of everything from your car payment, insurance payments, and quick trips to the grocery store or gas station. It all adds up. Write down quarterly expenses as well such as homeowners dues or garbage bills. Figure out how much per month those quarterly expenses cost and figure that into your monthly expenses. Anywhere money goes, write it down.

Rank your expenses. Now that you have your list, analyze it. I would group everything in different color pens or using markers or highlighters. Anything that is a must have or a necessary expense, mark it one color. Those would be your car, house, insurance, utilities etc. Then mark important but not necessary items in another color. These would be things that you may need but can wait. For example, clothes for work. Last, mark everything that is unnecessary. These are items that can be cut out like coffee, alcohol etc. Now, you should be able to see easily where your money is headed. You can start cutting away the easy items first and work your way through your list. Please understand that you don't have to cut wanted items out completely. It is okay to cut down to 1-2 per week instead of 1-2 per day.

Stick to your amounts. An easy way to stay on top of your spending is to give yourself an allowance and stick to the amount. Allow yourself $50-70 cash per week to spend on items like eating out, getting coffee, going to the movies, etc and try to stick to your amount. If you use cash, you'll actually be using it and you will see it leave your hand. This has a much greater effect than credit or debit cards. Anything left over can be put into a savings or rolled over to the following week!

Start using your bike. I find it easy to make a list of the common places I go. I mark places that are within 2 miles, 2-10 miles, and over 10. If it 2 or less, I have started walking there to save gas. If it is 2-10, I ride my bike. If it is over, I try to only frequent those places once a week. I can save on gas this way and get regular exercise.

These are several ways you can stick to a budget or save money. I find it easiest to figure out my expenses and cut out spending in several areas. I allow myself $30 per week to eat out. If I have leftover money, I use it the following week and I go to a nice restaurant as a treat. If I don't have money left, it's fast food for me or eating at home. I find that sticking to my agreed amounts allows me to save money and have money left over to purchase 1 big item a month at $200 to $300. I work hard to save it so I treat myself to that and it is a system that works for me. If I don't purchase a big item, the money goes into a CD where it can collect interest while I decide on what I will be purchasing. Once you find your system you will really enjoy saving money because there are several ways you can reward yourself!