Trouble with money?

Many of us at one point or another have been a bit tight with money. It’s common. Living expenses are high and depending on where we live, living expenses can range even higher. Take NYC for example, the “Capital of the World”. The cost of a meal at an inexpensive restaurant for one person averages $15. A three-course meal at a mid-range restaurant for two people averages $75. A regular cappuccino is $3.95. 1 pair of Levi’s 501 jeans averages $57. Renting a 1-bedroom apartment in the center of the city will cost you approximately $2,839.88 a month. Basic monthly utilities including electricity, heating water and garbage for a small apartment is $150.30 and Internet (6 Mbps, Unlimited Data, Cable/ADSL) is $49.18 .* Add to this the cost of childcare, transportation, preparing meals at home, entertainment, etc and it’s no wonder why we feel cash strapped.

What to do? The only thing we can do. Set up a budget to see where all our monthly expenses are going. On an excel spreadsheet, make a list of all the items you spend on monthly. For example, list your rental or mortgage costs, childcare costs such as babysitting and alimony, child support, clothes, movies, dining out, transportation, utilities, home costs such as curtains, bedspreads, furniture, TVs, kitchen gadgets, etc. Jot down everything you spend money on and by that I mean everything. Don’t leave anything out; otherwise you won’t see the complete picture. On the column next to this one write down your total income, subtract the expenses from your total income. What’s the difference? Do you have any money left or are you in a deficit? If you have some money left, great! Make sure some of this money is going towards saving for your emergency fund, retirement and college savings. If you are just scraping by, you need to whittle down your expenses. If you are spending more then you make, you have a lot more work to do.

That is the great thing about writing down everything you make and what you spend it on, you can see it. Seeing where your money actually goes every month makes you more receptive to your spending habits and much more aware of where your hard earned money is going.

Creating a budget sheet will help you cut down on unnecessary spending habits and help you save more. Of course, you can’t be a scrooge either. You can spend a little here and there on things that make you happy; this will promote your health and overall well-being but do it all moderately while also saving for a rainy day. Go ahead and try it.

*Cost of living expenses data obtained from www.numbeo.com