Financial

The Simple Guide to Setting a Budget While You're Unemployed

Cash flow is a major concern after you lose your job. Your income slows to a trickle or even a stop, and your bills seem to be a hundred times bigger because you have less cash to pay them with. But if you budget your money effectively, you can make it last longer, and have some left for when you really need it. Here are a few things to keep in mind when putting your budget together.

Get Help

There is no getting around the fact that budgeting sucks. It is boring, time consuming, and sitting there adding up receipts just feels unproductive. That’s why it can be difficult to keep a budget going for more than a couple of months before you give it up and start spending blindly again. Fortunately there are resources to make the process as painless and automated as possible to keep you motivated.

Web and phone applications like Mint, Spendbrite, and Left to Spend will help you track, visualize, and control your daily and monthly spending. These applications securely connect to your financial accounts and update your balances and budget reports after every transaction.

If you prefer a more hands-on approach, there are several personal budget Excel spreadsheets (including a popular one at the Consumerist blog) floating around the internet. The upside to these is that they don’t give third parties access to your financial data. The down side is that they are more labor intensive.

Bucketize

The first step to creating a usable budget is to create broad spending categories, or buckets. Separate out your spending in the way that is most useful to you conceptually. The default categories are by type; such as rent, clothing, and food. But if you think in terms of time, separate your categories into daily, weekly, or monthly expenses. If you think geographically, create buckets for each merchant or recipient that you pay out to. Whatever way works best for you, the goal is to create categories that are clear and distinct.

Analyze

Once you do make a complete budget, you will undoubtedly start to notice things, like exactly how much you are spending on fast food every month, or that you burnt through your monthly clothing budget in the first week. This is why budgeting is such a useful tool. Not only do you know where your money is, but you can also see where it all goes, so you can start to change your spending habits with an eye toward saving and stability.

Adjust

The key to keeping a budget in the long term is to keep it flexible enough to stay in line with your actual spending habits. If you start taking public transportation instead of driving, you can adjust your gas budget down and increase your music and books buckets. The goal is to reduce your overall spending to a level that you can sustain over the long haul, but where you spend your money under that level should be open to revision as new circumstances and choices present themselves.

Controlling your spending ultimately depends on controlling yourself. But clear, comprehensive monthly budgets make that easier to do by showing you where your money is going, and what spending you can cut most painlessly.


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