How to Manage Your Budget with Rising Costs

In a struggling economy, it can be difficult to manage your budget due to rising costs of fuel, utilities and other necessary items. During tight financial times, it is more important than ever to know how you are spending each dollar. In order to manage your budget, you must track your spending, eliminate unnecessary expenses and make permanent lifestyle changes to ensure that your income covers your costs. Here are some tips to learn how to manage your budget with rising costs.


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    Track your spending for the two months. List all purchases and bills paid. Keep close track of all credit card, cash and debit card purchases, and checks that you write. If you're not tracking each and every expense down to the penny, you won't get a complete picture of how you are spending your money.
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    Sort your spending by necessary costs and unnecessary purchases. Your utilities, mortgage or rent payments and medical bills are necessary costs. However, that morning coffee or snack that you purchase on your way to work is unnecessary. Other unnecessary costs may include expenses for movies or other entertainment activities, magazine or newsletter subscriptions, cable or satellite TV, gym memberships and dining out.
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    Eliminate or reduce your unnecessary expenses. Every once in a while it's natural to splurge on something unnecessary. However, if your budget is tight, it is essential that you reduce the number of unnecessary expenses you have each month. Often, these items may be easily replaced. For instance, instead of raiding the vending machine at work, bring an apple or other snack from home. Rent a movie instead of going to the cinema for the latest flick. By thinking in a cost-savings frame of mind, you will be able to reduce your unnecessary expenses.
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    Analyze your income. Track all sources of income from your job, any rental properties or other side businesses you may operate.
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    Compare your income to your expenses. If your income is considerably more than your expenses, you are probably prepared for any rising costs your budget may endure. However, if your income is only barely meeting your expenses or is not meeting your costs, you will need to make some changes.
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    Make lifestyle changes in order to reconcile the difference between your income and expenses, if necessary. An income from a part-time job may make the difference in managing your budget. Or, depending on your mortgage or rental costs, it may be necessary to move to a cheaper living arrangement. Other smaller lifestyle changes might include adjusting your thermostat for cheaper utility bills, driving your car fewer miles, excluding entertainment and dining-out costs or buying cheaper products when you go grocery shopping.

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Categories: Budgeting