Making Numbers Work for You

The most basic fact of budgeting is that you need to have more money coming in than going out. While this concept is incredibly simple, the execution can get a little tricky, especially if you are already in debt. However, once you learn how to make the numbers look pretty and lined up so you aren't sinking, budgeting can become your best friend.

Let's create a sample budget. There are two ways you can go about this.The first way is to figure out how much your committed expenses are and then figure out how much you need to earn to cover these expenses (each month, each week, each day etc.) So if each month your committed expenses (utilities, insurance, mortgage payment, car payment, groceries, i.e. the things you MUST buy) total $1500, then you absolutely MUST make at least this much. Keep in mind this does not cover any contributions to savings, retirement, kids tuition, emergency funds, or anything beyond necessary expenses such as entertainment or eating out. This method of budgeting works best for people who earn a good portion of their income from commissions or tips. If your salary is not set in stone this works as a form of motivation. You know your goal and you must hit it. Anything beyond that goal is icing on the cake.

The second method of budgeting is to take how much you earn and appropriate it towards your committed expenses and then use the left-over for savings and other less urgent expenses. This method works best for people who are working on a set, non-hourly salary.

I'll use my budget as an example. As a college student I work a part-time hourly job as well as writing for Associated Content and some other on-the-side gigs. My committed expenses total approximately $700/month. I work 20 hours a week at $8/hr. That's $640/month before taxes, so let's say approximately $600/month. I need to make up the gap between my expenses and my income somehow. That's where Associated Content comes in. 700-600= $100. The lowest Associated Content pays for any article is $3. $100/$3 = 33.333. So to completely guarantee that I will cover all my costs I need to write 34 articles in one month. That works out to about 1 article a day and 2 articles/day a couple time a month. Not hard to do. I rarely make only $3 on an article but I'm playing it safe and being conservative with my estimates.

That's another rule of budgeting. Stay conservative with your budget. Overestimate your expenses and underestimate your income and you'll keep your head above water. Just learn to move numbers around you'll be fine. You can make your budget work, you just have to be willing to do what it takes, even if that means taking a second job or cutting back on eating out or canceling your Netflix subscription. Associated Content is one obvious extra source of income, You can also write for Mylot. There are also places where you can take surveys or become a mystery shopper. Just be sure to look into these opportunities properly and don't pay for a service that promises to provide you with "training materials" or "leads". These are scams.