Tidy up more than your home this season by giving your budget a money makeover! Carmen Wong Ulrich, host of Marketplace Money, APM, and author of "The Real Cost of Living" offers a few helpful budgeting tips for reevaluating your spending plan.
Write down everything you spend for a month.
“What works for dieting, works for budgeting,” Wong Ulrich says. Dieting studies have found that keeping a daily log of meals and snacks reduces the amount of food consumed, and the same goes for spending. Keep track of everything you spend money on, and after a month this log will provide a clear picture of where every dollar is going. “Look where you can cut back and where you have wiggle room,” she advises.
Evaluate needs and wants.
“Basic needs tend to be the same across the board,” says Wong Ulrich. “But the ‘want’ creeps in when we make decisions about not only frivolous spending, but big ticket items in our budget.” Yes, we need a car, but is an expensive car still a ‘need’? It is imperative to evaluate each spending choice as a matter of needs versus wants and even further, at what price-point the purchases should be made. “I’m not a fan of living so frugally that you can’t enjoy life, but I’m a big fan of being honest with yourself as to the quality of the ‘needs’ choices you make.”
Splurging today means sacrificing tomorrow.
“Splurges are going to happen, but be willing to pay the price down the line in terms of giving up something else.” She gives an example, “If you splurge with a night out with the girls, you’ll need to commit to cutting back on other spending during the week.” It is a slippery slope, but it is important to maintain your spending balance.