What do you think of when you hear the word "budget"? If it stresses you out or makes you think that you'll be limiting yourself, then maybe it's time you gain a fresh perspective on the subject.
Let's say you're making $2,000 a month, just as an example. You're single. You're living in a low-cost area away from the city. Let's also say that you're renting an apartment for $600/month. That $2,000 a month is what helps cover your apartment rent, the utility, electric, and gas bill (which could be worth $100 - $150); your water bill (which could be worth $50 - $100), and your grocery bill (which could be around $200). Overall, you'd be spending an average $1,050/month. Let's not forget eating out and shopping for clothes (which could add up to $500/ month); which you put on your credit card (with a credit limit of $5,000 minimum). That's a total of $1,550/ month you are spending.
You have $450 left to do as you please.
That's not much at all, is it?
Is it possible to increase your budget so you can afford to do more with your finances (such as investing, save up for the next big vacation, etc.)? Yes! To break down this example further, let's look at your income and your credit card limit:
Income = $2,000/month
Credit card limit = $5,000
If you think about it, the best way to maximize what you already make is to do the following:
1. Cut back on eating out and shopping
2. Try to eat in more
3. Utilize Cash-back on your card and through various cash-back sites (links provided below)
4. Think of your credit card as a line of credit you can utilize for Major purchases
5. Wait for things to go on sale before you buy them (or find a more affordable version of what you want.
CUT BACK ON EATING OUT AND SHOPPING
This seems rather challenging to do at first. But, it is more rewarding to budget how much you should spend on eating out and shopping. Make a dining-out points system. If you plan to dine out every month, limit how many times you dine out with the system (i.e. Eating out 5 times a month = 5 Dining Out Points). Whenever you want to dine out, try not to go over a certain budget (i.e. $30 maximum). For shopping, set aside a percentage of your income (i.e. 11%) to shopping out. Wait until you reach a certain dollar amount (i.e. $200). Then, go shopping.
This should shave off at least $200 - $250 month on your eating out and shopping budget.
You just added $700 extra!
TRY TO EAT IN MORE.
The best thing to do when you are on a budget is to set a meal plan. It can be whatever food you like to cook. Pinterest and YouTube has a vast collection of recipes you can try at home. You can take some ideas from both and just go grocery shopping for the ingredients you will use for that week's meal plan. This should cut your grocery spending by at least $100.
You just added $800 extra!
UTILIZE CASH BACK ON YOUR CARD AND THROUGH VARIOUS CASH-BACK SITES
If your credit card has a great cash-back system, definitely utilize it! Rewards points can go a long way; especially if you are shopping for Christmas, Birthday gifts, vacation deals, or various other things. This is why most credit cards come with incredible cash-back benefits you can use to get gift cards from Visa, AMEX, MasterCard, etc. But be careful! You don't want to max out your credit limit and incur a high credit card bill!
That's why there are other options for cash-back below:
1. Rakuten (Previously known as ebates) can help you earn cash back + add on $25 when you refer friends: https://www.rakuten.com/r/HIDJP3?eeid=28187
2. For Grocery Shopping, save and earn cash back + Refer friends with Ibotta: https://ibotta.com/register?friend=dhgnfcw
3. If you're wanting to invest, go for Acorns Investment (share your link with friends to build up your investment portfolio):
THINK OF YOUR CREDIT CARD AS A LINE OF CREDIT YOU CAN UTILIZE FOR MAJOR PURCHASES
One thing that most financially wealthy people discuss is having a line of credit (money you can use, so long as you pay it back in time). If you have a credit card, think of its credit limit as a line of credit (money you can use). However, only use that card when you are making important purchases. Make sure to earn money first so you can pay the credit card bill later. Here's an example: You want to pay for a new fridge. The fridge is $1,000. Make sure to have $1,000 set aside before you purchase it with your card. That way, when the bill comes, you can pay it off in full.
WAIT FOR THINGS TO GO ON SALE BEFORE YOU BUY THEM
Or, you can purchase an affordable brand that is similar to what you want (like the fridge example). Now, you can wait until Black Friday or Cyber Monday. But, what is more realistic to do is pay attention to flash sales. Shop around for the best deal in your neighborhood before going to major outlet stores.
(Now, this example is not a final solution. And this is just a practical example anyone can utilize. This is not official advice.)
There are various ways to utilize your funds. But the important dilemma here is what to do with the extra cash you just built up. How about invest it for your future? That is what will be covered in the next blog post.
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