7 Easy Ways to Make Over Your Budget

You're always happy to give your look or wardrobe a makeover, but what about your budget?

True, a budget makeover may sound less fun, but with the right plan, it can be simple, rewarding and mentally cathartic. Think of it like a spa trip for your bank account.

“It’s basic math and time, not rocket science,” says Lois Smith, consumer and family economics educator at the University of Illinois Extension. “Your goal is to get back to the basics, so you tell your money where to go, rather than your money telling you where it went. It’s really a spending plan, not a budget.”

Once you know what you have to work with, you know where you can make adjustments. Test drive Smith’s super easy ways to cut, add, tweak, change and rethink what and how you spend each month.

1. Keep bills in a box. Or a file. Or an envelope. The point, Smith says, is to have your papers organized and together in your home office to make money management easier.

2. Identify where money is slipping through the cracks. Track your purchases every day for a week and you’ll likely find you’re spending without realizing it—a quick Starbucks drive-thru, a few magazines at the checkout or a bucket of popcorn at the movies. Can you cut those expenses or find a way to create the experience more cheaply?

3. Determine fixed versus flexible expenses. “Plug in your fixed items first, like rent or mortgage, insurance and car payments. Then you can play with the flexible items such as food, budget, and clothes,” Smith says. If you budget as you go during the month, it’s likely a few unplanned flexible purchases could drain your stash of extra cash before you’ve covered your basic needs.

4. Be vigilant in seeking out excess. Look for areas where you’ve got more than one item that serves the same purposem such as phone lines, family cars or gym memberships. Can you do with one? Smith also suggests scrutinizing service packages. Do you need all cable channels? Can you pare down your monthly cell phone package? Do you have more than what’s required in auto insurance?



5. Rethink transportation.
Perhaps you need to keep the car payment, but you can certainly reduce your gas costs. “Limit shopping trips or make a list before you leave the house that prioritizes where you want to go and the fastest route, so you hit everything,” Smith advises. “We’re used to running out to pick up milk, then later remembering we forgot to grab the laundry, then an hour later driving to get lunch, so we end up making numerous trips throughout the day.” If you strategize your day, you’ll save time and money.

6. Renegotiate every bill. Call every credit card company you owe and reduce your interest rate, especially if you’ve had a salary cut or job loss. “Most will lower your rate or knock off part of the bill if you tell them in advance that you’re in trouble,” says Smith. “It’s better for both parties to find common ground and create a workable plan.”

7. Cut dining out in half. No one will argue that the grab-and-go lifestyle isn’t easier, but if it doubles (or triples) your monthly food budget, is it truly worth the convenience? With simple pre-planning, families can save hundreds of dollars each month by eating at home and using the extra cash for other needs, says Smith. Even just reducing meals out by half can shave enough off your budget to toss into savings.

For more information on budgeting, check out Smith’s site, “Tough Times,” at the University of Illinois.

—For the best rates on CDs, mortgages, savings, credit cards and more, enter your ZIP code at BankingMyWay.com.

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