When looking for ways to save money, many consumers immediately start wondering which bills can be eliminated. While these are important considerations, if you’re looking to save money, simplifying your budget can offer an even better look at how to save money.
Likewise, we are often taught to save money by creating highly detailed budgets. However, instead of detailed budgets that track down every expense in your life, a simplified budget could provide an even better solution. Here’s how.
Simplifying Your Budget – The Concept
For starters, it’s important to understand the concept behind simplifying your budget. Essentially, simplifying your budget boils down to consolidating all similar expenses. So instead of an individual entry for each credit card bill, how about combining them all into a single ‘credit cards’ category.
You can do the same for utilities – just list them together instead of separating each of them. This gives you a better idea of where all your money is going. Four or five credit card payments for twenty bucks a month may look small, but combining them will show you they’re more than you think and give you a better idea of what to cut.
Next Step to Simplifying Your Budget
Now that you’ve taken the time to simplify your budget let’s look at where you’re spending the most money. You can identify these areas by using the “grouping” technique that we mentioned above. After identifying them you can ‘zoom in’ for a more detailed line item by line item examination.
Time to Make a Decision
Now the only thing left to do is to decide what you want you want to do with the items eating up your savings. Can you cancel a credit card or two? What’s the biggest bill in your utilities category, and is it possible for you to reduce it or even eliminate it?
Starting with the simpler view lets you see where you’re really losing money so you can more closely review only the items that need your attention.
Choosing to simplify your budget is only the beginning. Saving money isn’t always easy, but having an idea where your money goes certainly helps. Also, be prepared because it might take an hour or two to really crunch all the numbers, but just remember that it’s time well spent.
You can also use one of the free online budget websites to help you plan out all of your options and figure out what’s working.
Do you prefer a more detailed budget or a simplified budget? Let us know by commenting below.