In Money for Life Coaching Sessions, I often run into situations where my clients have expenses and initial spending plans higher than their income. I do what I can to help them balance things out so that their expenses match their income, but really it’s up to them to make the decisions about where they can lower their expenses.
I often suggest that they start by eliminating everything except their required expenses, both monthly and periodic. Once you know how much you need for your mortgage, utilities, taxes, insurance payments, auto registration, minimum debt payments, etc. then you have a clearer vision of how much you can spend on the discretionary areas.
After you have entered all of your required expenses, you can clearly see exactly how much income you have left to spend on the discretionary areas of spending by looking at the difference at the bottom of the spending plan window. Depending on what this amount is, you may want to explore options for lowering some of your bills. Here are a few ideas
- Changing plans on your cell phone, home phone, cable or satellite, etc. can help to lower costs.
- Sometimes asking your credit card companies for lower interest rates will help to lower your monthly debt payments.
- Installing a programmable thermostat can help to lower your utilities bills.
When you are ready to start making allocations for your discretionary spending, start with the most important things first (i.e. groceries), and then go down the list from there. When making your allocations, be sure to keep a close eye on the balance of how much you have left to spend. In order to stay balanced, you may need to make some hard decisions to reduce spending in certain areas, or put other items on hold for a while. These are not easy decisions to make, but living above your income will continue to jeopardize your financial future.
Once you have gone through all the areas of spending, if you truly do not have enough income, you may want to look at some ways to increase it. Perhaps taking on a part-time job for a few months, or selling some items that you don’t need any more.
It’s not always easy to live within your income, but spending less than you make on a consistent basis is the only way to improve your financial position and create a stable financial future for you and your family.
-Jennifer, Money for Life Coach