For instance, do not add $20 to both Credit Card and Meals Out for the same dinner

Although credit cards can potentially exacerbate debt, when utilized under strict control, credit cards can be incorporated into a budget as a way to save on purchases and even build good credit. However, particularly for those who have constrained budgets, it is important to use credit cards sparingly to avoid large interest payments that could strain budgets even further. Please visit any of the calculators below for more specific information or calculations.

It is important to make sure not to double dip when accounting for student loans, personal loans, or credit card debt in the budget. This applies to student loans and tuition and credit card balances being carried month-to-month.

While the expenses associated with daily living may seem insignificant when compared to the other categories, they can discreetly add up. A category that has lots of wiggle room in improving a budget is “Meals Out.” Cooking at home is generally significantly more cost-efficient than eating out, and depending on how often a person has meals out, eating in more often can potentially reduce living expenses by a large amount.

“Food” and “Meals Out” are part of the expenses breakdown in the results. In general, this combined expense should be less than 15% of income.

In the US, healthcare costs about $10,000 a year on average for each person. Unfortunately, this is an expense that generally has little pliability in a budget. However, there are some strategies that can be used to potentially reduce healthcare costs:

It is important to remember that credit cards are not an endless resource, and that they must be repaid in a timely manner to avoid large interest payments

  • Don’t smoke, eat healthier, get plenty of sleep, and exercise regularly.
  • Use in-network doctors, hospitals, and facilities.
  • Regularly re-assess health insurance needs.
  • Use tax-advantaged accounts that are created for healthcare spending. In the U.S., this is called a Health Savings Account (HSA).
  • Buy generic drugs when possible.
  • Seniors can try to rearrange their environment in order to reduce the risks of falling, since falling is one of the most common events that lead to a large healthcare bill for the elderly.

It is often stated that an investment in education is the best investment a person can make. Statistics show a high correlation between higher degrees of education and higher income levels. This category probably has less to do with scaling back, but more to do with planning for it correctly. Keep in mind that in most developed countries, student aid from the government tends to be very accessible so that no matter a person’s financial standing, they have the ability to attain higher education. Budgeteers struggling to repay multiple high-interest student loans may consider consolidating them.

Having a child is generally one of the costliest (and time-consuming) expenses for any adult, so it is important to plan for this financially. Please visit any of the calculators below for more specific information or calculations.

In healthy budgets, excess money tends to be allocated for the future, which includes savings or investments for retirement, emergency funds, or college savings. It is important for budgeteers not to overlook the importance of an emergency fund; having one can make or break being in debt or not. If savings and investments are managed well, it is not uncommon to see average income earners retire at earlier ages. As a general rule of thumb, it is recommended for the total of this section to be 15% or higher. Please visit any of the calculators below for more specific information or calculations.

This section of expenses is generally the most pliable in a personal budget relative to other categories such as housing or savings. It includes a number of expenses that could fall within the blurred lines of “needs” and “wants.” This leaves a lot of room for personal discretion, which can be a good or bad thing. Bad in that over-expenditure can wreck a budget, but good in that moderation can ease stress and potentially heal a budget. Important decisions regarding whether or not to take an expensive trip to the Maldives, whether to attend a Super Bowl in town, or whether it’s worth spending large amounts on an art collection go a long way towards achieving financial goals. Lavish vacations, loving pets, and fulfilling hobbies are all great ways to invest in oneself, only if financially feasible. For anyone looking to fix a faltering budget, this section should be the first area to evaluate.

Incomes

Credit cards carry negative connotations regarding budgeting because people tend to use them to spend more than they can afford.