Forget about your budget for a moment. What is the normal range of activities in your household? Are you racking up expenses “going out” all the time, or do you normally stay in and save money. From food and entertainment to more, your household’s baseline is a great indicator of your budget.
You Are What You Eat
This popular saying has little to do with finances. Linking health to your diet, though, we can make an analogy. The health of your budget in inextricably linked to activities that normally take place in your household.
Remove the special events and look at what is “normal.” Now take a look at some key categories that pertain to your household:
- Food: What does an average dinner look like for you/your family? Is there a healthy mix of dining out, carry out, and homemade meals? Is there a preponderance of one category? (Jeffs note: H and I are planning on leaning heavily on our CSA this year)
- Entertainment: From Netflix to the movie theater, this can be a game-changer in your budget. Consider your habits, from going to the bars and expensive sporting events to board games with the family and more.
- Shopping: Are you addicted to shopping? By taking a look at credit card bills, you can see if this is your secret habit. You can even break your budget by going on your computer or smartphone to shop.
Establish a Healthy Baseline
Some of us may have unhealthier habits than others. After all, there is nothing wrong with going out to eat once in a while. Yet, if that in itself is a habit – while on a tight budget – then you might want to partake in this reality check.
Many personal finance articles will look at particulars. No, we’re not talking about term deposit rates and a car insurance comparison that can help you take your budget to new heights; we are keying in on that of your actual budget. You’ll read about setting limits, giving yourself an allowance in certain categories, and so forth in regards to your budget.
What’s the point? When you look at your routines, you can often see the health of your budget revealed through these items. Those who are on tight budgets may be eating out too much, shopping a lot, and going out with their friends too much. That simply isn’t healthy for one’s budget.
If you need help in these areas, look to make your “baseline” healthier. Fall back on playing board games and homemade meals with your family. Make a habit out of having your friends come over for an inexpensive night in – and combine it with free and cheap ways to go out and enjoy the nightlife. Whether you’re single or have a family, you can have healthy budgeting habits revealed through how you live.
Overall, it can be confusing looking at numbers. Surely, there is a place for that – at the end of each month. Qualitatively looking at your actions can reveal what is present in your budget. Do you normally engage in activities that are frugal? Take a look at your household’s baseline to see how you are influencing your budget.
Jeff’s Note: Exchanging habits was probably the best thing for my budget. I started eating a home more, going out less and finding different things to do that didnt cost near as much. As my “monthly nut” went down, I was able to increase my debt repayments and get out of debt faster.