10 Ways to Budget and Spend Less Than You Earn

Unless you want to be like the federal government, owing more than the value of most of the world combined, you need to get control over your spending.

Fortunately, you are not the government, so your credit will probably run out well before you hit your first trillion dollar debt, but you can still get in trouble by spending more than you have.

Why not take some time to get control over your income and spending?

The following list offers 10 ways to budget and spend less than you earn.

10 Tips to Budgeting and Spending Less Than You Earn

1. Understand How Much Money is Coming In

Studies have shown that a startlingly high number of traditional workers do not know what their income is. Those who operate small businesses or have multiple freelance or contract roles are often even more in the dark about how much money they are actually making. You can only spend less than you earn if you know what you are earning.

2. Don’t Wait for a Perfect Scenario to Budget

You can write down your straight-up monthly income and expenses, but never get on target because they don’t match your current situation. You may be behind on bills, owe late fees, or have other expenses that won’t fit an ideal budget. Start your budget from where you are now: the money in the bank and the bills you need to pay, and take it from there.

3. Shop with a List and Don’t Deviate from It

This will keep you from needless expenses while you shop. At the grocery store, try using a calculator to help estimate your bill as you go along.

4. Always Check Clearance Racks at the Stores Where You Shop

You can save on everything from food to electronics this way.

5. Do Your Accounting

You can use a simple cash-based physical system such as the “envelope” method, or use Quicken or an online financial management system. You don’t want to spend too much time bookkeeping, but you do need to spend some time on it. Without a system, determining your current status is difficult.

6. Put the Most Important Things First

You need food more than you need a TV, OK? That example sounds simple, but many other priorities are not as clear. List your priorities starting from the most essential. For example, if you don’t have food, not much else matters. Similarly, you really can’t get by in the modern world without electricity, water, and car insurance. The rent, car payments, clothes, and health care are also at the top of the list. Budget for the important things first, and then decide what other things you can leave out of your budget.

7. Buy Late Model Used Cars Rather Than New

Most studies show you can save thousands of dollars over a new car with higher payments. Make sure that you compare car insurance policies as well to get the lowest prices on automobile insurance.

8. Work as a Team

Get everyone in the household involved in the budget process. If you live on your own, that means you. First, people are more cooperative when they have a say in the budget. Also, getting more than one perspective on decisions almost always helps. Finally, get everyone to cooperate by conserving resources and saving money.

9. Make a Judgment

If you spend more than you earn, you are either spending too much or you are earning too little, or some of both. Start a side business or sell stuff online to bring in extra cash as you work to limit your expenses.

10. Talk About It

Some people naturally avoid talking about money, especially when there’s a problem to avoid an argument. Try growing up and discussing how to handle unexpected bills and surprise windfalls. By working together, you can make sure that everyone makes an equal contribution to cost cutting and revenue generating efforts.

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