Five simple tips for better budgeting

KANSAS CITY, Mo. - Everyone needs some sort of budget, but the stark reality is many people aren't operating under any sort of set rules or guidelines.

According to a new study, Kansas City ranks near the bottom of the list of best and worst budgeters among the country's 30 largest metropolitan areas.

Card Hub, the authors of the study, offer the following tips for better budgeting:

• Feed an Emergency Fund – Set aside a bit every month with the ultimate goal of having about a year's after-tax income in reserve in case of an extended income disruption.

• Rank Expenses in Order of Importance – Budgeting doesn't mean you have to give up all hobbies or creature comforts. Rather, it simply necessitates cutting expenses that you've grown to view as necessities even though they're truly luxuries that are dragging you down into debt. By ranking your expenses in order of importance, you'll be able to keep the things you value most and avoid all the headaches that come with unnecessary debt.

• Use the Island Approach – This entails separating your debt from your everyday expenses. That will enable you to amass the best combination of low rates and lucrative rewards possible, pay off what you owe faster, and realize immediately if you're overspending (you should never get charged interest on your everyday account).

• Treat Debt Payments Like a Snowball – In constructing your budget, make sure to account for monthly debt payments. When it comes to distributing those payments, you should pay the minimum on all but the balance with the highest interest rate, while attributing the rest of your monthly allotment to that more expensive debt. Do that until the first balance is gone, and then repeat until completely debt free.

• Eliminate Temptation – We all have our spending temptations, whether it's a high credit limit that we can't resist exhausting each month or an Xbox that's begging for some new games. Whatever the spending trigger is in your case, it's important to eliminate it, even if that means taking drastic measures such as cutting up your credit cards in order to prevent use while continuing to benefit from monthly reporting to the major credit bureaus.

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