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Ask the experts

Ask the Experts – August 2020

Many people don’t like talking about money. For some, they’d rather not share what they consider a private topic with anyone other than those with whom they are very close. Other people believe that discussions of money and finances are impolite or even rude. There are also a lot of people who refrain from talking about budgets and other financial matters because they’re worried about saying something wrong.

However, not talking about money makes it difficult for people to learn and grow. When you discuss money, you recognize new opportunities, learn things you may not have already known, and discover new ideas and strategies. These ideas can help you plan for the future, make better decisions, and give you the information you need to improve your financial future.

That’s why our team answers financial questions each and every month. We want to provide answers for people who have money and budgeting questions and help them get a better handle on their own financial situation.

If you have a question for our team, ask us online on FacebookTwitter or through our website.

The questions here have been condensed or rewritten for clarity and simplicity.

I’m spending more every month than I budgeted, how can I fix this?

If you’re frequently spending more than you allocated in your budget, you’ll need to make some changes. To do this, you should do a review of your spending and compare it to your plan. Are you regularly overspending in a particular category? If so, maybe you can adjust your budget to put more money into this area (and reduce the amount in another category) to better reflect reality. If you don’t have room in your budget to make the adjustment, then you’ll have to cut spending somewhere.

Look at how much you spend in an average month and figure out where this money is going. If you’re tracking your spending, it should be easy to determine what you’re spending money on. However, if you’re not keeping a detailed record, look at your bank and credit card statements. These should give you a good overview of how much you’re spending and where it’s going. Then, going forward, commit to tracking your spending because this helps you stay on budget.

Once you know what you’re spending money on, you can adjust your budget. The first place you’ll likely want to cut is anything that sticks out to you when you look at your spending. Are you spending much more than you expected on take out, for example? Are you paying for more monthly subscription services than you assumed? These categories can be good places to start cutting.

The next step is to set some priorities. What matters to you in your life? What is less important? Use this to guide your budget. There are some things you have to spend money on (food, rent or mortgage payments, electricity, etc.) but a lot of your spending likely goes to variable costs such as restaurants, entertainment, clothing, and other such costs. These are areas where you have some control over how  much you spend. Since the vast majority of us only have a limited amount of money to spend each month, we have to make choices. Put money into the things that matter to you and cut from expenses that you can do without. This will help your budget balance.

How do I budget for one-time expenses like holiday spending?

One-time expenses can be a bit tricky to budget for since you don’t pay them every month. However, you can still include them in your budget even if you don’t have to “pay” them each month. First, you’ll want to estimate how much you’re going to spend on these expenses. You may want to break this down by category to make it easier.

For instance, create a category in your budget called “gifts” and use this as money for holiday gifts, birthday gifts, graduation gifts, etc. To figure out how much you’ll need to save each month, look at what you spent last year for these gifts. If you haven’t kept track of your spending, looking at old credit card or bank statements can help. Once you know the total, divide it by 12 to give you a monthly goal.

You’ll also want to create savings categories and put money aside for other expenses that don’t come up every month, such as taxes, insurance costs, medical appointments, car repairs, etc. If you put money aside monthly, you won’t be caught off guard or left scrambling when it comes time to pay for one of these expenses. This will help you stay on budget and avoid debt.