2torial #0564:
Learn2 Establish a Personal Budget (continued)

Tighten your belt

With your goals firmly in mind, make an initial subtraction of your total expenses from your net income. How much is left? Apply this money to your goals.

If you're disappointed at how much is left--or if you need more to meet demanding goals such as paying off debt--it's time to tighten your belt a little. Some good ways to do this are:

Identify dissatisfying spending. With a bird's-eye view of your spending, do you notice your money flowing in a direction that really isn't all that important to you--especially in light of your goals? By being aware of your spending habits and changing them, you may be able to save a surprising amount of cash.

Examples of common areas where people overspend include eating out (it's much cheaper to cook at home, or bring lunch to work), taking taxis (mass transit is cheaper), and buying magazines or books you never read. Changing these habits may take some discipline, but it won't change your quality of life.

Cut back. Do you spend too much on things that make your life easier or more fun but drain away your cash? Whatever you do, you don't want to feel deprived, so don't completely cut a category that's important to you. Instead, see where you can cut without drawing blood. These choices are entirely up to you and also depend on the aggressiveness of your goals.

Some examples might be purchasing fewer magazines or CDs, using the library instead of buying books all the time, or waiting to rent videos of the movies you feel you don't have to see on the big screen.