Given the cost of living these days, establishing and maintaining a household budget is one of the keys to living comfortably. For many of us, however, budgets are tight, and one unexpected or ill-timed expense can often throw our budget off, making it more difficult to make ends meet. The good news is that there are some creative ways to make your dollars stretch further and keep track of your spending so things don’t get out of control. Here are a few strategies to help you maintain your household budget.

The “Envelope” System

A tried-and-true budgeting method, the “envelope” system is basically a cash-only system in which you keep a set of envelopes for all your itemized expenses. The cash you put in each envelope goes only for that expense, whether it’s food, bills, clothes, rent, etc., and when it’s gone, it’s gone.

Financial guru Dave Ramsey explains the process here in detail. The benefit of this system is that you can tangibly see how much money you have available for each category so you don’t overspend. If you don’t want to handle cash directly, a number of budgeting apps based on the envelope method are available for your smart phone; just make sure you have the discipline not to “dip” into other envelopes.

Add to Your Savings

Saving money is a key to any successful financial plan, for two reasons:

  1. Unexpected expenses are budget killers, and savings creates a pad to deal with them; and
  2. A habit of saving helps build long-term wealth for the future.

Anyone can save money, even those on a tight budget. One creative way to get into the habit is the 52-week money challenge, in which you save $1 the first week, $2 the second week, and so on. By the end of a year, you’ll have $1378 in savings, and you’ll be surprised at how easy it was to do!

Reduce Your Debt

For many of us, debt is the bane of our existence. For all intents and purposes, debt is money you could be using that goes to the banks instead to pay for all the stuff you bought on credit. Reducing your debt, therefore, puts that income back into your pocket.

One method to kick off your debt reduction strategy is to try the “snowball” method of reducing debt. That is, target any extra money to pay off one credit card, then use the money you’re no longer paying on that card to pay the next card off, and so on.

Cut Up the Credit Cards

Credit cards are the quickest and easiest way to throw off a budget — not to mention the last thing you want to be doing is adding to your debt. If your credit cards are a source of temptation for you, cut them up to keep them from threatening your budget.

With a bit of discipline and these helpful tips, it’s possible to maintain a household budget so you and your family can live with peace of mind. For information on affordable rentals, contact Olympia Management at 256-894-2382.