"Bills, Bills, Bills" isn't just a song by Destiny's Child. It's how many of us feel every month going through our budget. If you're out of money before your next paycheck arrives, setting up a budget is a better strategy than borrowing money to pay off your bills. Go through your expenditures line by line, looking for places to cut. Cell phone plans, cable packages, and daily eating habits are great places to start when looking for ways to immediately cut spending. A few dollars cut here and there can add up to big savings over a month. Follow BBB's tips for budgeting and you'll be replacing "Bills, Bills, Bills" with "Mo' Money Mo' Problems" in your playlist in no time.
Consumers may find themselves juggling bigger-than-expected bills after the holidays, especially if they didn't pay attention to their spending and credit card use. If you want to get back on top of your finances, there's no better time to take stock of your situation and figure out how to live within your means.
Consumers should scrutinize offers to reduce monthly payments by borrowing or refinancing their homes to make sure they aren't scams. BBB receives calls daily from consumers who've received notices about government grants, mystery shopping "job" offers and other ways to reduce their bills by refinancing their homes, taking out a loan or improving credit scores. But many of these offers are scams that could cost money without improving your financial picture or could lead to identity theft. BBB advises consumers to check out any company offering to help improve their financial situations before listening to a sales pitch or paying any fees.
To get started on a budget, first write down what money you have coming in: wages, child support, interest income, rental income or stock dividends, for example.
You'll also need to keep track of your spending to find out where the money is going. Some costs - such as rent, car payments or utilities - can't be trimmed. However, most people will find things that can be cut back, such as packing your lunch rather than eating out. Are there things you're paying for that you don't need, such as an extra cell phone, computer or car? What expenses are "needs" and what are "wants"?
You also may consider finding ways to increase your income, such as taking a part-time job, turning a hobby into a business or holding a yard sale to get rid of unwanted household goods.
If you find that you're seriously in debt, you may consider working with a nonprofit credit counseling agency, such as Clearpoint Financial, which partners with BBB on consumer finance issues.
Once you achieve a balance between spending and income, consider socking some money away in a savings account or emergency fund. Smart saving strategies include:
* Pay yourself first, putting a small amount aside every week. Even $10 a week will grow to more than $500 by the end of the year.
* Build up an emergency fund equal to at least three months' worth of income.
* Take advantage of employee benefit plans, such as 401(k) retirement savings plans. These plans allow you to save money before taxes, and many employers match at least part of your contributions.
* Be smart when you choose a savings account. Shop around for the best rates, consider fees and other features.
Don't just set up a budget and forget it. Review it regularly to see if you're still on track. If you're finding it hard to meet your goals, you may need to revise the budget to accommodate your needs.