How to Budget and Save Money

By Dana Hinders

If you're constantly broke shortly after payday, it may be time to review a few tips for how to budget and save money. Regardless of your income, knowing where your money goes and planning your purchases wisely is the best way to get your finances back on track.

How to Budget and Save Money

A budget is simply a plan for how you want to spend your money each month. It lists your major fixed expenses such as your mortgage, car payment, student loan payment, or day care costs. A budget also estimates spending for groceries, clothing, gifts, entertainment, and other variable discretionary expenses.

Budgets are most often prepared on a monthly basis, although you may find a weekly or bi-weekly budget that corresponds with your paycheck cycle to be more effective. Some people make a zero-based budget in which every penny is allotted to a specific spending category, while others leave a small cushion for unexpected purchases.

You can prepare your spending overview using a free budget worksheet from a personal finance website, use a spreadsheet, or enter your data in a personal finance program such as Quicken. The pen and paper method is simplest, but using a computerized system will allow for a more detailed tracking of your expenses.

For best results, you should review your budget periodically to make sure it's a realistic reflection of your spending. Often, people don't realize what they are spending on entertainment, lunch with coworkers, or new clothes. Adding up all of your purchases in each of these categories will make it easier to identify areas in which you can scale back your spending.

Planning Purchases to Save Money

One of the easiest ways to learn how to budget and save money is to simply time your purchases to correspond with store sale cycles. If you can buy items when they're on sale, you'll save money with a minimal amount of effort on your part.Here is a monthly breakdown of the most common sale items:

January: Fitness equipment, bed linens, furniture, clearance holiday wrapping paper and decorations
February: Fragrances, humidifiers, electronics
March: Winter coats and boots
April: Warm weather clothing, digital cameras
May: Outdoor furniture, picnic supplies, athletic apparel
June: Tools, lingerie, swimsuits, summer clothing
July: Monthly gym memberships
August: Fall clothing, school supplies, lawn mowers, air conditioners
September: Cars, trees, shrubs, bicycles
October: Grills, vacuums, appliances, winter clothing
November: Stereos, wedding dresses, televisions
December: Children's toys, new model cars, electronics

In terms of grocery shopping, here is a good schedule to follow when choosing which items to stock up on for your pantry:

January: Diet foods such as frozen meals or 100 calorie snack packs, chili, crackers, chips, dips, soda
February: Canned fruits and vegetables, tuna, pie filling, waffles, syrup, hot cereals, chocolate candies
March: Ice cream, frozen fruits and vegetables, frozen TV dinners
April: Eggs, ham, butter, organic foods
May: BBQ sauce, mustard, mayonnaise, salad dressing, ground beef, hot dogs
June: Dairy products
July: Ribs, steaks, soda, baked beans
August: Pudding cups, lunch meat, cold cereal, waffles,
September: Breakfast bars, peanut butter, jelly, canned fruits and vegetables, yogurt, snack cakes, chips
October: Nuts, chocolate chips, flour, sugar, apple sauce
November: Turkey, canned pumpkin, stuffing mix, instant potatoes, butter, gravy, cranberry sauce, hot cocoa, coffee, tea
December: Cream soups, pie filling, broth, ham, soda, muffin mix, brownie mix, whipped cream