Money Saving Secrets and Budgeting Expenses

What comes to mind when you hear the word ‘saving’? I know, I know; but it is a very important task. Saving is a good thing; a really good quality in a person. A saver will look for ways to budget expenses and makes small sacrifices to gain more freedom in big ways.
Let’s take a look at Sara’s income and expenses and find ways to save money, pay down her debt, pay all her bills and even have fun.
But first open up a Microsoft Excel spreadsheet or any other spreadsheet that allows you to make simple calculations. You can look at the example I show of Sara’s Income and Expenses Worksheet.  It is here:

http://lifeguidesimply.wordpress.com/2009/07/22/how-to-save-and-budget-expenses/

Click on the link.  It will open up in a new window so you can follow along.
Sara makes $30 an hour. She works 40 hours per week and obviously 4 weeks in a month. 30*40*4=4800. If she subtracts the estimated taxes of about 25% of the total paycheck she would have the equation $4800*.25=1200. That is 1200 in taxes. Sara would take the total she earns per month which is $4800 and subtracts $1200 which will make her a total income per month to be $3600.
30hr
40hrs
4wks
1200tx

30*40*4=4800
4800-1200=3600
Sara has the following expenses:

Mortgage (Rent) – Mort
Utilities – Util
Credit Card – CC
Car Insurance payment – Ins
Gas payment – Gas
Cell Phone Payment -Phn
Food – F
Miscellaneous -Mis

Mort – 2000
Util – 200
CC – 100
Ins – 80
Gas – 100
Phn – 100
FF– 500
Mis – 500

In the end she is left with only $20.

But Sara has never sat down and wrote the above table down. She never even guessed where all her money goes. She spends so much of it on useless things. And worst of all she doesn’t save any money for a nice vacation each year or for a fun retirement. But she could. She needs to trim the fat.

The average mortgage payment in 2006 was about $1687. I rounded up to $2000. An average American holds about $10,000 in debt. Sara has just that. It would take Sara 12 months to pay that off if she would pay only $850 per month and 24 months or 2 years of she would pay $420 per month.
Paying debt off is a priority for Sara and so is saving.
She wants to save $1000 per month in a safe savings account that accrues an average 5%.

Sara also called her bank and negotiated a better rate for her mortgage payment and it is now $1400. She would turn off the heat when she would leave the house in the winter and turned off lights and appliances when not in use and she was able to knock off $100 off her utility payment. She continued paying $80 for insurance however she made fewer trips around town and planned her routes better to save on gas and she is now able to pay only $80 for gas. She looked at her phone bill and realized she didn’t need to pay for internet on her phone and she switched to a cheaper priced company called Cricket. Her phone bill is now $50. She now has unlimited talk, text and picture messaging – all for only $50. She feels great already. She decided, instead of going to restaurants to eat all the time, to cook at home. She started shopping at stores like Costco and buying in greater quantities to save money. Her food bill is now $250 per month. She decided to list all of the things she likes to do that are not exactly necessary like getting her hair and nails done and manicures and road trips and all the shopping. Oh the shopping. She looked at her closet and saw ALL her clothes and wow she decided to sell a lot of it on eBay to make some money and clear out her closet of all the things she doesn’t even wear. She sells her things within 5 months. Each month she makes an average of $50. She decides to set aside to pamper herself a whopping $300 for things like shopping, hair, nails, etc.
Let’s look at her budget and fit those numbers in.

Her total income:
3600
-1000 Sav
-1400 Mort
-100 Util
-420 CC
-80 Ins
-80 Gas
-50 Phn
-250 F
+50Ebay
-300 Misc
= 3680 total.

Sara is $30 over budget. She can easily trim that off to not go over budget off her miscellaneous expenses. That will make her misc amount to spend to be 270. Her final budget is great and she gets to save $1000 per month, pay her credit card, mortgage, utilities, gas, phone, food and go have fun. Plus she makes an extra $50 per month on eBay. That is her small at home business. How awesome and fun it is to make a personal budget. Now she doesn’t worry about where her money goes. She can see it on her spreadsheet. Sara is able to do all the things that she likes and she can now look at her budget each month and follow it to attain some goals like going on a vacation with the savings or just leaving it to grow for emergencies. She is able to save and still get the things she needs and wants. She is able to pay off her credit card in 2 years and in 2 years she would have $24,000 dollars saved. And that is without the 5% compounded interest. With interest of 5% she would have $26,460 in only 2 years!! Make that $76,577 in 5 years. That’s a really nice chunk of money!!

Congratulations Sara.

Alright, you may be in a different financial situation and not make as much money as Sara. I will make a budget if you make $10 per hour. And we can find creative ways to stay in budget and still save money for yourself and pay all bills and to have fun as well. Next article is coming soon.

If you need private one-on-one phone consultation on saving, budgeting, financial management and making spreadsheets you can email me for rates at msweet14@hotmail.com.  I will try to get you in for an appointment.

Mariya Skachko

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