Many Americans dealing with the economic fallout of the coronavirus pandemic are looking for ways to lower their expenses. Often the first step suggested when you're trying to save money is to budget — however, not everyone knows where to start when it comes to budgeting effectively.
The best way to budget is to actually see what you spend. The first step is to get a piece of paper, dry-erase board or a physical or digital spreadsheet and write out your expenses and your income. When you budget, take-home income is the only thing that matters, so don’t include pre-tax earnings.
Figure out what your monthly income is and compare that with your monthly expenses. If you are unsure of what you spend your money on, start by listing the bills you pay each month: mortgage, rent, car payments, internet, subscription services, groceries, etc. Then move on to extras like the weekly movie you go see or your standing nail appointment.
Once you have a good estimate of your monthly expenses, add them up. How does your income compare to your expenses? Do you have a deficit? If you do have a deficit, determine your biggest non-essential expenses. If you are ordering out often, you might want to consider making food at home more frequently. If you have been paying for a gym membership that you don’t use often enough, consider canceling and opting for free online workouts instead.
Budgeting is a great first step toward saving money, but it’s not the only way. Check out these other tips for saving money during the coronavirus pandemic.