Second, It Makes The Money More Real To A Lot Of People

Category: Finance, Personal Finance.

Having a tight budget is hard, even when it s a choice you made when you decided to be a stay at home mom.

Managing your finances well is one of the big keys to coping with a tight budget. Few families find it financially easy to go to that single income, but it s a choice many families make. You have to be very aware of where your money is going- a good habit even if your budget isn t all that tight. While rent/ mortgage and other bills may need to be paid by check, grocery shopping and other things may be better off paid in cash. A very popular way to cope with money issues is to use envelopes, and pay cash for as many things as possible. This money is generally separated into an envelope for each purpose.

First of all, if you have cash, you can t go over budget. Paying in cash accomplishes a couple things. You become very aware of how much money you are carrying. Paying by check or credit card, it s easy to ignore what you ve just spent. Second, it makes the money more real to a lot of people. With cash, you KNOW.

First you need to figure out all the bills. So how do you decide how much goes into the envelopes? That s rent/ mortgage, insurance, utilities, credit card or other debt payments, etc. Now start figuring out how much money you need for each envelope. Subtract this amount from your available income. You should have envelopes for groceries, gas for the car( s) , eating out, or whatever your, medical particular needs are. Yes, if you are going to do fun things like eat out, you should budget for it.

This will vary from family to family of course, and depends on your needs. Don t let those little extras completely ruin your budget. It s much better to admit that you will do some fun things and figure out what you can spend on that. If everything has been planned out, then you decide to do something that wasn t budgeted, you can ruin your careful planning. It may take a bit of time to properly balance your envelopes so that you aren t struggling to keep your spending within what you put in each. Just think of how much gas prices have changed in recent years!

It will also be necessary to regularly review what should go into each. One way to figure out how much money you need for everything is to review what you have been spending. Don t try to limit it more than you are planning on doing once you re using the envelopes. If, like most people, you don t have receipts for everything you ve bought for at least the past 1- 2 months, take a month and track your spending, every penny of it. You need a realistic estimate. Just think about the various budget- breakers that come up all too often, such as medical bills and car repairs. Some envelopes should be preplanning envelopes.

If you re setting aside a little bit for them, they make less of an impact when they happen. It s really amazing what being aware of exactly where your money is going can do for you. If you get good at this type of budgeting, you gain a lot of control over your money issues.

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