Maximize Your Budget

Jessica has dreams and ambitions and wants to know how to maximize her budget to increase her net worth. She would like to own her own business one day, but it feels impossible when she’s barely scraping by, living paycheck to paycheck. So, what can she do? How can she do it?

Advertisements

How can you maximize your budget to generate wealth?

Let’s use the example of Jessica. She earned her BA in a liberal arts field and obtained employment doing administrative work, earning about $30,000 a year. After taxes, she takes home about $20,000, or $1660 a month. She lives with roommates, so her rent is about 1,000 per month. She owes $20,000 in student loans and makes her monthly minimum payments of $150. After her monthly expenses, including groceries, health insurance, utilities, and miscellaneous things, she isn’t left with any money left over, and sometimes, she can’t even pay off the entire balance of her credit card.

Jessica has dreams and ambitions and wants to know how to maximize her budget to increase her net worth. She would like to own her own business one day, but it feels impossible when she’s barely scraping by, living paycheck to paycheck. So, what can she do? How can she do it?

When you make your monthly budget, the place to start is to track where your money is going, and when. The easiest way to do this is to write it down so you can see. Here is where Jessica’s money is going:

 

$1,000 – rent, end of the month

$50 – split utility bill, end of the month

$116.50 – metro card, beginning of the month

$10 – metro card, middle of the month when she left her unlimited in her other jeans on Friday night

$150 – student loans, beginning of the month

$460 – credit card bill, beginning of the month

 

Jessica learns, to her dismay, that she is spending $1786.50 each month, which is about $125 more than what she takes home each month. No wonder she can’t pay off her credit card bill each month! But that’s okay. Now she has a clear picture of where her money is going. She can even look at her credit card bill and see that most of it goes to buying groceries, lunch, and going out with friends. After looking at her breakdown, she sees that all of her spending is necessary. You need to pay rent if you want a place to stay, you need transportation to get to work, you need to eat food to survive, you need to pay your student loans, and you need to socialize to keep your sanity. So where can she lower her bills?

She can start keeping her metro card in the same place, like a wallet, so that she stops losing it and stops having to buy new cards. Depending on how far she lives from work, she could invest in a bike and start biking to work. Even if it’s just for a few months a year, that’s significant savings. She could look at changing her payment plan for her student loans. Federal loans give you the option of making income-based payments, so that you can pay only what you afford and not have to worry about being penalized. Finally, she could lower her credit card bill by spending more on groceries, packing her lunch for work, and cutting back on socializing. She could also change her due date for her credit card bill so that her bills are staggered through the month. After going through her budget, Jessica revamps a plan for a new budget. She decides that she can buy a decent bike for around $200, use it from April until September, keep it in her apartment, and figures that will save over $550 during the course of the year. She also decides to start packing her lunches and spend a little more on groceries. She looks into her loans and realizes that she can lower her payments to $50 per month. After trying this for a few months, she sees that her credit card bill has gotten smaller, and tracks her spending again:

 

$1,000 – rent, end of the month

$50 – split utility bill, end of the month

$116.50 – beginning of the month

$50 – student loans, middle of the month

$310 – credit card bill, middle of the month

 

Jessica realizes that she now spends $1526.50 per month. Not only does she have $130 additional each month, when she buys her bike for the warm months, she’ll be saving over $550! Her net savings, after investing $200 into buying a bike and bike accessories, is $300! Over the course of a year, Jessica is able to save almost $2,000! And she is still spending time with her friends. 🙂

What’s your budget? Where can you save? By making small changes today, you can set yourself up for a better financial future. Here at the Future Starts Today, we are going to be focused on ways to maximize our savings so that we can begin building up our personal wealth. You don’t have to get a new job to start saving today. You just have to wise up, and we are here to help you.

 

Author: jade@futurestartstoday

Just a young person trying to make a difference in the world.

4 thoughts on “Maximize Your Budget”

  1. I’ve been browsing online more than 3 hours today, yet I never found any interesting article like yours.
    It’s pretty worth enough for me. In my view, if all webmasters and bloggers made good content as
    you did, the net will be a lot more useful than ever
    before.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s