Choosing Where the Money Goes

Filed in archive Saving on February 17, 2009

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After you have calculated both your income and your expenses, it is time to determine some action steps. The first
thing you want to do is to see what you have left over after all your bills and necessary cash expenses are paid. This
money is what you really have to work with.

In many homes, this amount may not end up being much - especially with winter heating bills. However, if you want to save money, it will have to come from this amount. You can, however, enlarge this amount if you work to reduce some of your monthly bills. My past posts have dealt with this and they include, cutting down on your heating, on some extra food (think sodas and snacks), and possibly some unnecessary optional bills.


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Then, take the remaining figure and divide it up into various savings accounts. Be sure to leave some for fun and activities, otherwise, it will be very hard to stay within your budget - and then you are not saving money.

It is probably better if you use separate accounts, or to save even more money, you can divide them up into two or three. You want an account for your emergency fund, for short-term savings and one for long term savings.

If you have a lot of debt, however, you want to keep your savings amounts low, and put much of it into paying off your debts. By reducing your debts, you will actually be able to save money by not having to pay as much interest each month. Certainly, you want to try and pay above the minimum each month if you can.

Also, you do want to build up your emergency fund, and you should build this up rather fast - primarily because you
never know when you may need it.

Remember that household budgeting can equal better savings.