Budgeting Advice for a Down Economy

Taking care of your money should be something that you do year round instead of something you only do during a recessession. However, budgeting during economic downturns is far more difficult. Below are some tips on how to budget your money correctly:

1. Plan for the worst case scenario such as someone losing their job or becoming too ill to continue working. If possible, you should try to save at least 3 to 6 months worth of bills including rent or mortgage payments.

2. Cut unnecessary purchases from your routine like buying gourmet coffee from a cafe or eating out. Instead, make your own coffee or get it from work. Trivial as this may seem, these small cut backs can amount to serious cash and can even encourage more bonding time between you and your family. Making dinner together can be a fun event.

3. Coupons, coupons, and more coupons! Collect coupons, pay attention to grocery store and department store discounts, and stock up on items that are on sale that you use regularly.

4. Contact your creditors if someone has lost their job and let them know about the situation you're in. Sometimes they may be able to help by putting in place lower payment plans. The last thing you want to do now is to get into even more credit card debt. Always be aware of how your actions impact your credit score. The last thing you want is to increase credit card debt or ruin your credit score. Think long term.

5. Keep a journal or spreadsheet of what you are spending including food, rent or mortgage payments, utilities, and any other expenses. Compare how you're doing month over month. By doing this simple exercise, you'll realize where all of your money goes and will make you more aware of your spending habits. You'll probably be surprised to see how much money you will be able to save by cutting out simple parts of your spending.

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