Back by popular demand, Budgeting is still a waste of time! Last week, I wrote an article called “Budgeting Is a Waste of Time”! I offered some suggestions about analyzing your expenses. Look at every expense and answer my three questions to determine if you should make any changes. What additional expenses need analysis?
The next expense category that you should look at is entertainment. Many people feel this is a discretionary item, because you can give up entertainment if your expenses increase. I think some entertainment is important. Generally, dining out, movies, movie rentals, amusement parks are some of the things in this area. What can you do to keep your expenses low! If movies are important to you, see if you can buy group tickets, this can save you as much as 40%. Dining out expenses can be reduced using 2 for 1 coupons, or purchasing $25 coupons at a huge discount through restaurant.com, or take advantage of frequent diner programs. Keep in mind what is important about dining out; it is a social situation not a spending marathon. You can always go to a less expensive restaurant and still have a good time. The purchase of books, magazines, music, cigarettes and alcohol can be reduced by using Amazon, iTunes or Costco.
A review of all your insurance expenses is very important. Think about your deductible, raising it to $1,000 from $500 can save enough to make a difference. Review your coverage to make sure you have sufficient and the right coverage for you. This can be a hidden expense if you have a loss. Last, talk to your agent and see if you are with the best and least expensive company based on your needs. You can also check or confirm, by comparison shopping your various insurance needs on the Internet. Is there a Flexible Spending Account (FSA) available? Are you participating in the FSA plan? Using pre-tax dollars in a FSA is like getting a 15-35% bonus depending on your tax bracket. If your prescription plan allows you to use a mail away program, take advantage of the savings.
Take a look at all your loans (mortgage, auto, personal, student and HELOC) and make sure you have the lowest interest rate you qualify for. Who knows how long these low rates will be available? These small changes add up! Aside from a lower payment, you save interest and a shorter time period. If you cannot negotiate a better loan rate, consider paying off the highest interest rates first. If you have any debt on credit cards, transfer balances to lower interest cards. Don’t be complacent with your debt; you can do something about it!
One of the most overlooked areas is income. Can you get a second job? Are you eligible for overtime? Do you receive a large tax refund at the end of the year? Should you adjust your withholding so you can use it during the year? You can increase your 401K deduction, IRA or Roth IRA. You can change your investments that are not in a tax referred account to yield dividends that may be used as income. Being proactive with your expenses is important, don’t take it lightly. You can change or adjust income, savings and your retirement contributions.
I know I threw a lot of information at you between the two articles. You may feel a little overwhelmed, but don’t just sit there and do nothing! Your financial future requires you to take control of your income and expenses. To just fill out a spreadsheet or some budget form and not analyze your income and expenses is similar to rearranging the deck chairs on the Titanic. In case you forgot, the Titanic sank on April 15, 1912. I still believe budgeting is a waste of time unless you analyze your income and expenses. After you evaluate your financial situation, prepare your budget to achieve your financial goals. Review your budget regularly and adjust as necessary. Was this helpful?
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