As personal bankruptcy has recently reached an all time high, it is more important than ever to develop and live by a household budget. This will help you in determining not only where your money is going on a regular basis, but it should also help you to cut down on expenses that are not necessary – as well as to save more money for the future.

In fact, being more aware of your spending habits can also make a big difference in your overall expenses, without impacting the quality of your life. The key is to first become more aware of where those dollars are going on a daily basis, and then making the appropriate changes that will be necessary to reduce costs.

Developing Your Budget

Just about everybody knows where their money comes from and approximately how much income they will receive on a regular basis. However, it is in determining where all of that money goes that can be a bit more difficult to track.

In developing your budget, your expenses should first be divided between mandatory and discretionary. For instance:

• Mandatory expenses are those that you must pay each month. These can include your rent or mortgage, utility bills, groceries, and transportation to and from work. Since these costs are not just mandatory but also are often a regular fixed amount, they may be somewhat more difficult to control.
• Discretionary expenses are those that you have much more control over. Typically, these are variable costs such as that for entertainment, vacations, dining out, and buying clothes. Because these items do not affect your overall lifestyle, you have the ability to choose whether or not to make these types of purchases – and if so, how much or how little to spend.

Next, you should prepare a daily expense worksheet and then start to track all of your expenses – even the smallest ones – because they all add up. Doing things such as controlling utility expenses by using more energy efficient light bulbs and appliances is a great way to reduce your expenses without even realizing it as you go about your daily activities.

In addition, you can do other cost-reducing things such as making it a habit to turn off unused lighting, shutting down radios and televisions when nobody is watching, and limiting your water usage.

When you go shopping, stick to a list. This will help you to avoid making unnecessary or impulse purchases. You should also look for coupons on items that you need and regularly use, as well as watch for sales or markdowns at the stores you frequent.

Taking the necessary steps to set a budget, track your expenses, and change your daily living and spending habits can truly impact your monthly outgo in a positive way – and this can all add up to more savings and far less debt – while still allowing you to live a very similar lifestyle to that which you are currently living right now.

In many situations however, bankruptcy is the only solution to the problem, if you live in the St. Louis Area, contact the bankruptcy attorneys at the LickerLawFirm who can explain the process and answer all your questions.