It is a good idea to have a budget, even if it is an informal one. Your variable costs are hardest to nail down, and those are the ones that can really blow your budget. These five tips will help you manage your variable expenses so you can stay on budget:
Get the most enjoyment for your money
You are pretty much committed to your rent, but you have some leeway in what you do with your other money each month. If you really enjoy that Starbucks every morning, it is probably OK to get it. However, other things you spend on may be more from habit than for pleasure. Evaluate your purchases and make sure they give you pleasure equal to what you spend on them.
Pause before you purchase
One of the secrets to staying slim is to be mindful about what you eat. You are supposed to ask yourself whether you really want that bag of M&M’s or whether an apple would be just as satisfying. You can try to whittle down your expenses in the same way. Before you buy something, think about whether you really want or need it.
Plan for seasonal expenses
Some expenses hit only every quarter (SiriusXM radio) or twice a year (dental cleaning copay). Other months offer the promise of reduced variable expenses (a week with generous in-laws at their lake house) or increased costs (because everyone in your family happened to be born in February). Acknowledging and accounting for the seasonal variation in your expenses will help you better prepare for them.
Put your spending in perspective
Think about what you really want in terms of how much money you make. In our family, we say, “I like this sweater, but not $40 worth.” Or you can evaluate a dinner out or other expense based on the hours you would work to pay for it. For instance, say your hourly rate after taxes is $18. A dinner charge of $80 means about 4 ½ hours on the job for you.
Track your expenses
You know how much the rent is, but you may not be aware of how much you are really spending on food, gifts and the many other expenses that crop up. Keep a record for a couple of months, either using a notebook or high-teach options like “Notes” on your phone or a mobile budgeting app like Mint.