Are you considering buying a new phone or laptop? Or maybe you're thinking even bigger and eyeing a car or home. No matter what your purchase plans entail, you'll need enough money on hand to pay for them, either upfront or over time — and this is where sticking to a budget can literally pay off.
To budget well, you need to not only set clear limits, but also regularly revisit these rules to see if they're still giving you the breathing room you need. With that in mind, let's go through a quick guide for keeping your budget up to date.
Step #1: Decide on a budget structure that fits your needs
The 50-30-20 rule budget is very popular, and for good reason. It sets aside half of after-tax income toward "needs" like housing and food, 30% to "wants" like entertainment and 20% to savings and debt repayment, giving you a clear path toward meeting obligations while still accumulating some cash.
Alternatively, you might opt for an 80-20 budget if you aren't sure about what counts as a need or a want. The 80-20 structure simplified expense tracking by giving you just two categories: savings (20%) and everything else (80%).
Step #2: Zero-in on cable, internet and phone bills
Still paying for cable or satellite TV? The cost of pay TV packages averaged $217.42 monthly in March 2020, or more than all household utility bills combined, according to multiple sources. Consider cutting the cord if possible.
While not as expensive, internet and cell phone service can also be pricey depending on the plan. Review your latest bill and look for opportunities related to:
- Autopay and/or e-bill discounts.
- Eliminating add-ons like device protection plans.
- Supplying your own router/modem.
- Reducing your speed tier.
- Switching to another service provider.
Step #3: Corral your online subscriptions
Paying a few dollars a month for Netflix, iCloud and similar online subscriptions can quickly add up. Mint has estimated that the typical American spends over $600 annually across services for everything from streaming video to cloud storage.
Although some of these charges may be for things that you can't or don't want to give up, it's also possible that some are simply ones you've forgotten about. Check all of your charges across your bank and debit/credit card accounts to see which ones you might be able to eliminate.
Step No. 4: If you don't use it, lose it
Going beyond digital subscriptions, it's also important to look for savings in any other recurring payments you could reduce, such as memberships.
For example, gyms offer a decent value for people who work out multiple times per week and/or need access to heavy, specialized equipment like Olympic barbells. For most other people, however, they often end up as money sinks, as a member can spend $30 or more a month for something they only occasionally use.
Not going to the gym as much anymore? Cancel your membership.
Step No. 5: Revisit insurance
Insurance payments, whether for a car, home or something else, can take a big bite of your wallet. Accordingly, it's important to shop around to see if you're still getting the best deal possible. In some cases, you may be able to realize immense savings.
The Federal Savings Bank can help you find financial products and services that fit your budget. Contact us for more information.
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