How to Manage What You Make

This post is also available in: Portuguese (Brazil), Spanish

By Catherine Blinder

A budget is telling your money where to go instead of wondering where it went!!

It’s easy to overspend at the holidays. But it’s easier to stay within your means if you plan ahead and develop a budget. Creating a budget for the holidays is good practice for developing a family budget that you can live with all year.

A budget is just an estimate of income and expenditure for a set period of time. A budget can help keep track of “fixed” expenses, such as rent or mortgage payments, utilities, car payments, cable, monthly bus or train expenses, loan payments, insurance, student loans, etc. – things that remain the same, or about the same, every month. A budget can also help you determine what “variable” expenses you have and how you can adjust them to help you live within your means.

For instance, if you know what your fixed expenses are, and you know what your variable expenses are – clothing, groceries, entertainment, gifts, remittances, etc., and you know you make the same income every month, you can easily figure out what is “discretionary” at the end of every month. For instance, if you make $2,000 net (after taxes) every month, and your fixed expenses are $1,200, and your variable expenses average $350 – you know that you have $450 for savings and unexpected expenses (or holiday shopping!).

The Internet and smart phones have made comparison shopping much easier. But when shopping online, shop wisely. Be sure you are purchasing from a secure site and review statements for accuracy as you receive them. Compare prices and shop sales and with coupons whenever you can. Planning ahead can help you save money and stay within your budget. It can also help you save money so you will be prepared for unexpected expenses.

When you delay, you pay. That is true for almost every aspect of budgeting. If you use credit cards to get you through the holidays and then find that you can’t pay them on time in January, it affects your credit rating, which then means that you will pay a higher interest rate. Don’t borrow more than you can repay in several months. Remember that credit card debt is relatively expensive. And if you only make the required minimum monthly payment, you may never pay off the debt.

When you don’t have enough money to easily pay your bills, fix your car, cover unexpected health care expenses and pay for children’s school or their sports or other extracurricular needs, taking out short-term loans and paying high interest rates or overextending on high-interest credit cards is not the answer. The answer is to sit down and think honestly about what you “need” and what “wants” you can afford.

Create a reasonable budget – the circumstances of our lives change, so a budget needs to be flexible and an honest reflection of what we expect to earn and spend. Make sure you provide for the unexpected by setting aside whatever you can afford in a savings account. It doesn’t matter what your income is, you can create a budget that will help you achieve your goals and work toward your future dreams, whether that is buying a home, a car, paying for school, a vacation or just being able to save a little for the future.

This article was written by Catherine Blinder, chief education and outreach officer of the Department of Consumer Protection of the State of Connecticut. To learn more about how the Department of Consumer Protection can help, visit us online at

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