It’s tough when you’re struggling to pay your bills each month on a salary that just doesn’t cut it. In this situation, you may be tempted to cut corners on almost all of your recurring monthly bills to help make ends meet. Trimming your monthly budget is a smart idea, but you don’t want to go overboard and cut out things that could end up costing you even more later on down the road. Here are six things you should always make room for in your budget to help you spend less over a longer period of time.
1. Retirement Account
The first recurring cost you should keep in your budget is for a retirement account. Some young people who don’t make very much money in the early stages of their career avoid the investment into their retirement because it’s so far away. This strategy can lead to financial disaster during your vulnerable senior years. Instead, make a plan to open up a small retirement account and start small. Even a few dollars each paycheck towards retirement can help you build that future nest egg.
2. Health Insurance
Health insurance is another thing everyone should make room for in their budget. If your job doesn’t offer an employer-sponsored health plan, it could be expensive to purchase your own individual insurance through your state’s marketplace. Despite this hit to your budget, it may be even more financially devastating to go without insurance. One serious health incident or accident could wipe out your entire savings or leave you in heavy debt for years.
3. Nutritious Food
Good food is another important thing to prioritize, even if it runs a little more expensive than you like. Instead of running to fast food restaurants or choosing frozen entrees for dinner each night, opt to purchase high-quality fresh foods, such as local produce, lean cuts of meat, and wholesome ingredients. Then, invest some of your time into meal preparation each week so you can stretch your ingredients into several healthy meals over the week. At first, you may be paying a bit more on your grocery bill, but over time, your health and overall well being should improve.
4. Good Car Insurance
A good car insurance policy is another essential you should never cut out of your budget when money’s tight. If your dollars are being stretched too thin, talk to your Dallas local insurance agents instead of cutting back on your coverage. Lowering your coverage could leave you and your car vulnerable to accident damage and the high costs of repair or medical bills. An alternative is to work with your agent to get a lower rate or a discount.
5. Emergency Fund
Putting aside some money each month for an emergency fund is another smart idea for any size budget. In many cases, people who live paycheck to paycheck can’t afford to take out a large lump sum for an emergency fund. One idea is to take out a few dollars each month and build your emergency fund over time. This way, you won’t be in a panic if you suddenly get injured at work or lose your job.
6. Renters Insurance
Finally, the last type of cost you should always have room for in your monthly budget is a renters insurance policy. If you’re struggling to pay rent each month, this may seem like a silly idea, but you’ve also got to consider the costs of replacing everything you own if something terrible happens. Fire, theft, or other disasters could wipe out your entire life if you don’t have the safety net of an insurance policy.
Having a limited budget means you need to be selective when it comes to your monthly costs. Avoid the temptation to cut out these important items so you can start to build a healthier financial history for the future.