Budget Planning 101 - stage 4

Saving Money


If you're just joining the budget planner, you should review the previous lessons:

How to establish your current spending

How to eliminate excess expenses

Expense Planning

In the previous lessons, you learned where you stand in your current spending. Knowing where you money is going is really the most important factor in getting control of your finances. Then you used this information to cut out excess spending and hopefully are using your money a bit more wisely now. In our last lesson you saw how to plan for emergencies and the non-regular expenses. The next step is saving money.



There may be several categories for saving money depending on your individual goals. When most people think about saving money they think of far off goals such as college tuition and retirement. You need to start thinking about 'spending' in a different way in order to understand the ideal of saving money. Ideally, we save money ahead of time, with specific purpose such as big purchases, special occasions, travel and vacations, as well as the far off goals such as retirement. This is a different paradigm from the current standard of charging those big purchases and playing catch-up later.

You may be thinking what is the difference if I save up for a purchase before or pay over time after a purchase. There are two difference: life, and interest. The unknown, or life as I refer to it as the first difference, is a reality of everyone's finances. Things happen all of the time that are beyond our control. As much as we try to plan for those unknown expenses as we did in lesson 3, there will sometimes be things for which we did not plan. It could be unfortunate things, such as family illness or an accident that causes missed work and wages, or a layoff from your job. Or it could be more happy occasions that may have gone unplanned: a new baby, a friends wedding gift, an invitation to the governors ball for which you need a new dress. The point is that unexpected things happen, and when you have already made a purchase that you are now trying to catch up with, it makes life that much more stressful. The second big difference with saving as opposed to charging, is interest. You will pay more for that item in the long run if you borrow that money and pay it back over time, rather than saving first and purchasing outright.

So I hope that this lesson has helped you to think differently about saving money. Saving ahead is cheaper, less stressful, and can help get you through life unknowns a little easier.

Budget Planning 101 - stage 3

Expense Planning


If you're just finding this discussion, you should review the previous lessons:

How to establish your current spending

How to eliminate excess expenses

Now that you have a good idea of where your money is going and have taken the time to sort through and eliminate some of the excess, you should have a positive cash cushion with which to plan. If at this point it is not a positive number, you have some further work to do on stages 1 and 2.

Expense planning almost always goes hand in hand with our stage 4 lesson, saving. However we will cover it first here since it's importance is often overlooked. The sooner you begin thinking about planning for the unforeseen, the better off you will be since you will start to take notice of those non-regular expenses sooner as well, which helps in the planning stage.

In stage 1 you established your current 'regular' expenses, and possible had one or two expenses that popped up out of the blue as well. If you didn't, you're lucky, but don't think you can escape them forever. These types of budget downers are a fact of life, whether it is yearly (or beyond) costs, like car insurance or inspection, or unexpected repairs or health care bills.

The point of this lesson is to get you to think about these things and realize that however unfair life may be sometimes, if you plan ahead, you will not be left struggling to get out of a financial hole once these things do come around, and they will.

• car repairs


• household repairs (appliances, plumbing)


• veterinary bills


• gifts (wedding, birthdays, Christmas)


• unexpected travel


• hospital bills, other medical expenses


• eye care, new glasses/contacts


• taxes, increases in home assessment or school taxes


• speeding/parking tickets

So there are some other expenses to think about planning for before we go on to the saving money stage.

Budget Basics - Cost Cutting Tips

Easy saving ideas without changing your life
Here are some easy spending modifications that can stack up to some real savings.

• Cut out one restaurant trip per month


• Order out for pizza one less time a month


• Have a family "book/no cook" night once a week - serve no-cooking-required food for dinner: salads, fruits and raw veggies - then curl up with a good book while giving the TV and other electronics (and your electric bill) a rest


• Avoid unnecessary late fees. Once you start tracking where you money is going you will see how these can add up - schedule automatic bill payment online wherever you can so there is less chance for paying late; and return you videos and library books on time.


• Bring snacks to work from home to avoid vending machines (this includes sodas and juices you like to treat yourself with throughout the day). This can usually cut this particular spending in half.

If you have other cost cutting tips, please feel free to share them or drop me an email and I will post them in a future installment of Budget Basics - Cost Cutting Tips.

Budget Planning 101

Budget Planning series to take control of your finances


This 5 step series we will walk through how to establish you spending baseline, track expenses, eliminate unecessary expenses, and build a budget for your lifestyle. There are software packages that can assist with money management but all you need is a pen and paper. In fact, I recommend carrying a small pad of paper to facilitate recording your incidental spending. During this process you will need to log all monthly bills as well. Be honest with yourself through this process and especially at the first stage of establishing your baseline. It is crucial to know exactly where every dollar is going, so this is the step that can make the largest impact on your budget process.

Welcome to the Budget Planner

Here we are going to talk about budget planning tips and techniques. If you have any questions not covered in our budget planning tips, please email you question to admin@consumorality.com