5 months ago

Better Man

Brett and Kate McKay

Brett and Kate McKay variable expenses. Variable expenses are those that fluctuate from month-to-month. You have a degree of control over variable expenses. These are the areas where you can cut back the most and start getting ahead in your finances. Variable expenses include items like groceries, gasoline, eating out, and entertainment. Set a reasonable spending goal for each variable expense. The two most important variable expenses, and the ones that you should budget for before you budget any others, are a retirement and emergency fund. Let’s face it, when it comes to retirement, we can no longer depend on our jobs or the government to fund it. So it’s up to us to do it. Read AoM’s guide to retirement accounts. In addition to saving for retirement, budget some money each month for an emergency fund. This money is to be used only in, well, emergencies, like unexpected unemployment or car repairs. Even if you can only sock away $25 a month in the beginning, it’s better than nothing. Most financial experts agree that you should save enough for three to six months of living expenses. If you’re looking for a good place to stash your emergency fund, check out CapitalOne 360. It’s an online bank and they have decent interest rates. It’s what I use. In addition to a retirement account and an emergency fund, you may also want to budget for what I call a “freedom account.” I put a monthly sum into the account to pay for expenses that come up regularly during the year. This includes a yearly vacation, oil changes, weddings gifts, Christmas presents, dentist and doctor appointments, etc. 5. Subtract your total expenses (fixed and variable) from your monthly income. The goal is for your expenses to be less than your income. If they’re not, you’ll need to tweak it some so that they are. This may mean cutting back or cutting out things like going out to eat or cable television. If you have any surplus, put it into your emergency fund or towards your retirement. 99

30 Days to a better man 6. Keep track of spending. After you’ve created the budget for the month, keep track of every single penny you spend to ensure that you stay within your budget. Keeping track of your spending will also come in handy when you make next month’s budget. You’ll be able to review how much you spent the previous month and adjust your budget accordingly. One of the best ways I’ve found to keep track of your expenses is You can connect your bank account to Mint, and each week you’ll get a report telling you how much you’ve spent on groceries, gasoline, etc. It can be very helpful and eye-opening to see your expenses broken down into a color pie chart; you may be surprised about what portion of your money is going to things like eating out. And you don’t have to worry about security; they use the same security measures as online banking systems, and it’s read-only anyway, meaning if someone did get in, they couldn’t withdraw or move funds. One of the best old-school methods of keeping track of your budget is to put the money you budgeted for certain things like groceries into envelopes. You only use the money in the envelope when making purchases for that thing. When the money runs out, you’re done spending in that category for the month. 7. Review your budget every month. Each month, go over last month’s budget to see how you did. You’ll be able to see where you did well and where you can improve. After you review, repeat the whole process and make next month’s budget. Tools For Budgeting Below, we’ve created a short list of budgeting tools that you can use to help you get started with your budget. What’s nice about all of them is that they’re free! 100