Only The Important: How to Audit Your Budget to Prioritize Vital Expenses
Your budget is only as good as you make it. While it’s nice to have one — a Gallup poll found that just 32 percent of all Americans keep a formal, household budget — it’s better to streamline it by prioritizing important expenses. Comb through your budget and identify the costs that are valuable to you, and you’ll quickly see where you can cut spending. Here’s how to go about prioritizing your budget.
Ask Yourself About Joy
Sit down with your next credit card bill and highlight all the non-essential expenses. Then go through each one of those and ask yourself if they brought happiness or real value to your life. It might seem corny, but it’s an easy way to expose wasted money. If any of the highlighted costs bring out a “no,” you know to cut that out next month.
Special Should be Special
Look through your budget and find the expenses that seem out of the ordinary. As US News reports, your daily, everyday life shouldn’t include unnecessary treats and rewards. These expenses — like lunch at the nice restaurant down the street — are special, and your spending should reflect that. If you notice a special treat has morphed into an everyday occurrence, do your best to make it an unordinary cost again.
Just like the “joy question,” you can identify vital expenses in your budget by thinking of them in the future. Comb through your bank statement and ask yourself if the expense will be adding value to your life one month/one year/multiple years from now. If it doesn’t make sense to be spending on the item down the line, it likely doesn’t make sense to be spending on it now.
Source: SMARTScore SavvyMoney Blog