How to Keep Your Household Budget Under Control

A well thought-out plan is essential for keeping your household budget under control. Your primary goals should be to reduce spending and save money.

Step 1: Planning Your Budget

Begin by collecting as many recurrent financial documents as you can. These should include:

• rent receipts
• utility bills
• phone bills
• Internet access bills

Have copies of your bank and credit card statements on hand to evaluate miscellaneous expenses. Follow these steps with an intention to spend as little as possible in order to meet your daily expenses.

Step 2: Selecting a Budgeting System

Decide whether a paper-based or software-based system will work better for you. If you use your computer daily, then financial software may be best. If not, then you may prefer to purchase a notebook, with columns on each page, for keeping track of expenses.

Keep in mind that software adds and subtracts the numbers for you, so you only have to worry about entering the correct amount in the right place. Paper-based systems require better math skills, although you can always use a calculator to check your math.

When saving money is of the utmost importance, downloading free software may be your best option. Look for open source software or freeware. Both types of license allow you to download and use the software for free. Visit software review sites to identify programs suitable for your needs and financial record-keeping ability. Always obtain software downloads from a reliable source to avoid infecting your computer with viruses and malware (malicious software).

Step 3: Calculating Income

Using the financial documents you gathered for planning your budget, calculate all sources of income, including pay, gifts, dividends and interest. The total obtained by adding these numbers together is your monthly income.

Step 4: Estimating Expenses

Review the most recent copies of your monthly or periodic bills. Add them together to determine how much money you must allocate each month to pay them. Be sure to include your rent and daily expenses.

Additional items such as gas, transportation expenses and clothing should be factored in. These expenses can be estimated on a  monthly basis by reviewing your credit card statements and store receipts.

Step 5: Prioritizing for Disposable Income

When allocating money for non-essentials, don’t forget to leave a cushion (extra money) for occasional impulse purchases and one-time purchases such as vacations, entertainment, CDs or a computer. You don’t want to cut your budget so close that you have no money left for things that you don’t buy everyday. Make a note of which items are most important to you. Use that number to estimate how much extra money you’ll need for non-essentials.

Step 6:  Sticking to a Budget

Even the best budget won’t help, unless you stick to it. At the beginning of each week, check your bank account balance to ensure adequate funds for that week. Pay your bills at the same time every month, and keep track of what is paid and what is pending.

Good record-keeping, as well as adhering to a system, helps to avoid late fees and bank fees for bounced checks. Planning and discipline are the keys to keeping your budget under control.

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Lisa Bernstein: As a long-time apartment dweller and seasoned condominium trustee, I have dealt with numerous landlord-tenant, property management, and day-to-day apartment complex issues. My extensive, direct experience has led to invaluable insights into apartment life from both the tenant and management perspectives.