INDIANAPOLIS — The sharper cost of living is putting a lot of stress on Hoosiers. If your paycheck suddenly doesn’t feel like it’s stretching as far, that means it’s a good time to take a look at your personal finances.
Andrew Butters, a professor of business economics at IU, says budgeting is your best tool.
First, he says to know the amount of income you have coming in. Then, write down every mandatory expense like rent, utilities, car payments, groceries and gas.
Butters recommends adding money to your savings as part of your mandatory expenses.
Once you look at how much is coming in versus coming out, see how much is left over for luxuries like eating out, streaming devices or clothing purchases.
Butters says that’s when the hard part starts; determining what you can’t live without versus what you don’t want to live without.
“Right now, you know obviously we’re all dealing with every time we go to gas station or get groceries, that total dollar amount is increasing,” Butters said.
“One thought is find creative ways to stretch that dollar in ways you wouldn’t normally be doing,” Butters said. “If you’ve got expected purchases you know is coming in the coming months, like back to school shopping, you can find opportunities when it goes on sale to stock up before that back-to-school stuff goes on sale.”
If you’re paying off debt, experts recommend the 50-30-20 budget. Keep essential expenses, like housing, to 50 percent of your income. Then allocate 30 percent for wants and 20 percent for savings and to pay down your debt.
It’s also a good idea to review your investment priorities because if your budget is stretched, you might not be able to contribute your usual amounts short-term.
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