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Save Money Creating a Budget: My Version Pt 2

Updated on October 21, 2013

If you are starting here, and want to start with my first hub about creating a budget go here.

Now that we have created our budget, what is next?

Now we need to determine what areas to focus on to actually start budgeting. Simply creating a budget does not mean you instantly start saving money(how to save money), we first need to find what areas we are going to start to budget, and then how are we going to do the budgeting, and how much.

Let’s not get the buggy before the horse, first thing first(where to start saving money). If you remember from the first hub, we had our budget split into two halves, the income side(is a salary worth it?) and the expense side. We will start with the expense side considering that is where most of your time(what is opportunity cost?) and savings will occur.

We need to find areas where we are actually able to implement a budget, and areas that we will not be able to touch, at least immediately. Below I will list different categories and their likeliness to implement a budget.

- House, rent, mortgage

This area of your expenses is hard to implement an immediate budget. If you have a mortgage, refinancing is about your only option to save short of renting out a room, or moving. If you rent, you can revisit this area of your budget when it is time to extend your lease or move. When that time comes, keep this in mind: having a house payment that is about 1/3 of your income helps make sure you have enough money left over for everything else without much sacrifice.

- Vehicle

There are some areas to both budget and save in this area of your expenses. This area includes a car payment if you have one, insurance payment, car washes, oil changes and repairs. If you are making car payments, you have a big choice to make. You can sell your car, pay off your loan, and buy a car with cash. You will save not only by no longer having a car payment that is collecting interest on the loan, but your insurance will be cheaper because your car will not be worth as much. If you decide you want your car with the monthly payments, you still have some options. Shop around for insurance. Go from full coverage to liability. If you take good care of your car, you will be rewarded with a long lasting and reliable vehicle. Get regular oil changes, but look for coupons. Find an honest, reliable mechanic that is not trying to steal your money, but is looking for a long time customer. Talk with them, build a relationship, tell them that you will come back if you are treated right, and you will tell others about your great experience. Do not under estimate the power of your voice and the power of your opinion as a consumer. If you want to budget in this area, it may take adjustment, but the savings will be huge.

- Utilities

This is one of the best ways to budget and look for savings right away. Utilities include phone, electric, water, heat, A/C, garbage, internet and TV. There can be huge savings by changing, eliminating, or limiting these different monthly bills. If you want to start budgeting in this area, it is not hard, but you need to make the choice and start doing it.

- Discretionary spending

Here is where budgeting starts and stops, literally. This is the number one area where a budget is most helpful. But like I said, easier said than done. Many people say “I am only going to go shopping and spend $50 a month on clothes”, but when the rubber meets the road, they blow their budget because they want to shop, and break their budget. My tip is to start small and build on it. The areas to budget in this category are shopping, eating out, grocery shopping, entertainment such as movies, golfing, going to bars or snowboarding. If you want to, I mean really are committed to saving, this is the first area to look deeper into. This is my recommendation to start because it is instant, easy, and flexible.

Now that you have written down your budget, use the above categories to decide where you want to START. Start is the keyword. DO NOT do everything at once, you will be shocked and quickly burnt out.

The next step: Pick an area that you want to start budgeting. Start your mind turning on ideas to cut costs in that area, and how much you think you can comfortably cut out of that category.

If you want, post a comment on what area you would like to budget and I will give some direction in those specific areas.

Next Hub- how to implement your budget and save in the areas you want to start with.

For more helpful tips, see my other articles here on hub pages, or visit my blog,


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