5 Areas in Which You’re Likely Spending Too Much
It can be easy to do: spending too much money in one area without even realizing it.
You’re a smart person, though. You know that in order to reach your financial goals, you have to take a good look at your budget and figure out where your money is going. But sometimes it can be hard to determine which budget categories you need to cut back on.
If you need insight on what expenses you should slash, here are five areas in which you’re likely spending too much.
Food is one of the easiest budget categories to overspend on and, likewise, cut back on.
Take a look at your normal food spending. How much do you spend on groceries? How much do you spend on eating out?
It’s recommended that no more than 50 percent of your take-home pay should be allocated to necessities such as food, housing, and utilities. One easy way to come up with a food budget is to divide your income by two and then subtract your housing and utilities bills. The leftover amount can act as a guide for your grocery spending.
Obligatory social events such as birthday parties, weddings, graduations, and baby showers can wreak havoc on your budget if you’re unprepared.
When you wait until the last minute to plan a party, purchase a gift, or buy an outfit, you’ll end up spending much more money than you had anticipated.
Plan for these types of social events in advance. For instance, if you’ll be throwing a birthday party for one of your children, budget a certain amount of money for the party and start planning at least a couple months in advance.
The longer you have to get everything in order, the better you’ll be able to find those really good deals and stay on track with your budget.
Cutting back on housing is a controversial topic. After all, it’s really hard to go from living in a 2400 sq. ft. single family home to a 400 sq. ft. condo just to save money.
But downgrading your living situation may be necessary. If you’re barely making ends meet, there’s a good chance that your housing costs are the culprit.
If you spend more than 30 percent of your take-home pay on housing, you may be jeopardizing your other financial goals.
Today’s hottest technology is a dud compared to what will come out tomorrow.
In a fast-paced society, technology is constantly changing. Staying ahead of the game is pretty much impossible unless you’re willing to shell out thousands of dollars per year.
Running to the store every time a new phone or gadget comes out is a good indicator that you are spending way too much money on technology.
There are two solutions to curb your technological spending: 1) go cold turkey or 2) give yourself a technology allowance and vow not to go over your budgeted amount.
This is a tough one to admit because of course you want your kids to have it all. The problem is that they’d probably be just as happy without the latest toy or game, and you’d have extra money to boot.
Here’s how you can solve this problem: Give your children a monthly allowance and assign them age-appropriate chores to complete.
At the end of the month, if your child has successfully completed his chores, give him his allowance. By doing this, you’ll curb unnecessary spending and your child will feel a sense of accomplishment. It is also a great opportunity to teach your kids about money management. Double win!
When it comes to budgets, there is no one-size-fits-all solution. You’re your own person. Your salary, needs, and life goals aren’t going to match the person next you. To get the most out of your budget, plan it around your financial priorities. As long as you’re contributing enough money to reach your retirement and other financial goals, then splurging on a fancy dinner, a much-needed trip, or a new outfit isn’t going to make or break you.
Money is a tool that can help you build a better life, so spend and save it wisely!
Alexa Mason is mother of two, freelance writer, and personal finance lover. She shares her thoughts on Everydiv Loves Your Money, a blog about living for today and planning for tomorrow. The site focuses on starting early on your financial goals, not living beyond your means, or trying to keep up with the latest “must have.”