Fixing Your Budget

You look at your budget and you think my goodness, how am I going to turn this around from a deficit to a surplus? Generally it will mean that you need to make some tough decisions to spend less than what you earn. There is no better time to start now and get stuck into it.

Your budget figures should show discretionary and non-discretionary spending. The first quick step is to eliminate all of the discretionary spending. Discretion spending is basically goods and services you can live without, you should not be spending money on these until your budget is in surplus (if ever at all). An example is the weekly visit to the movie theatre, this is discretionary as you can live your life without seeing the movie at the theatre, if you really need to see the movie, rent it at a fraction of the price of a theatre ticket. Next look at these non-discretionary spending. Separate the credit card statements from the other bills.

Look closely at the credit card statements and identify the purchases that were not to pay a bill, such as a utility bill. I think you will find ad-hoc purchases you have made on impulse at the mall, possibly gym memberships and many others. These really are discretionary items and you should eliminate them as well. Keep going through all your bills, even non-discretionary bills can be reduced. An example is your utility bill. Can’t you reduce it by not having lights on in rooms where nobody is, can you bundle your utility bills to one supplier and obtain a discount for doing this? As you can see there is a lot you can do to reduce your expenditure to turn your budget from a deficit to a surplus.