Can You Afford to Spend after Paying Essential Bills?

Do you have a budget for your weekly expenditures? Do you even have a budget for monthly expenses? Surprisingly, not many people take the time to create a budget based on their income. While it is still possible to manage your finances without a budget, not having this kind of guideline is a major contributor to financial issues. If you do not keep track of how much you are spending on items such as clothing or restaurants, how will you know when you have reached your limit?

With that in mind, there are two specific categories within monthly expenditures: essential and non-essential. One of the tricks to budgeting is curbing non-essential expenditures. Perhaps less well known, however, is that curbing some of the essentials is the single best strategy to staying within a reasonable budget.

What are the essentials?

It is important to determine which items are essential for day-to-day living as well as any foreseeable future costs. For the most part, this includes groceries, rent (or mortgage costs), public transit fare, vehicle maintenance, and fuel. Essential expenses also include insurance payments and taxes. However, where many would have previously considered expenses related to cell phone, Internet, and CableTV bills non-essential, today’s technological dependence on technology has resulted in households being reliant on these technologies.

Although many now consider these costs as essential, their ability to drain money from your budget has not changed. U.S. News indicated that “according to data consultant Gigaom, basic U.S. broadband Internet service is $528 a year. A CableTV bundle (including Internet, telephone and television) is more, $128 per month, based on a 2011 report by SNL Kagan, and prices have risen since.” At present, consumers can expect to pay prices such as $90 for Internet and TV bundles (but only for the first year of service). Cell phone costs have risen dramatically since 2013, when plans including 1,200 minutes, 300 text messages, and one gigabyte of data every month cost $145.79 in the United States.

What is left over after the essentials?

What you have left over after spending your money on essential items varies based on the overall amount of money that you make each year at your job. According to Planet Money and The Atlantic, people earning $150,000 and over each year have approximately 40% of income left over after essentials, while those starting out in their careers or others who are likely to struggle with bill payments only have 15% left over. However, it is important to note that the essentials in their calculations—housing, transportation, food, utilities, and clothes—do not include smartphones bills or Internet access.

Let’s get an estimate for much you can expect to have after paying for all the essentials, including Internet and smartphone expenses. In this scenario, you earn $30,000 each year and have 15% of your disposable income left over, totalling $4,500, after paying for all essentials except for your Internet and smartphone expenses. However, after adding your smartphone ($150) and Internet ($90) bills, this becomes $1,620. While it is possible to survive on this amount, it may not be realistic should emergencies or other unforeseen expenses arise. Additionally, saving for the future (retirement, children’s education, et cetera) becomes harder as the costs for smartphones and Internet rise faster than inflation.

Budgeting Guidelines

The 50/20/30 rule is one of many strategies you can use to create an effective budget. In this rule, split your take-home income into three parts: 50% to fixed expenses, 20% to building your financial foundation, and 30% to flexible spending. Fixed spending includes rent or mortgage payments, utilities, and gym memberships. Overall, fixed spending includes all expenses that do not vary much from month to month, which means that Internet and smartphone bills can be included in this category. The financial foundation section of this plan refers to planning for the future (retirement, education, et cetera). The last section, flexible spending, is for all of your day-to-day expenses including shopping, groceries, and eating at restaurants.

Some tips for budgeting effectively are to use cash whenever possible, as many believe it is harder to part with cash rather than digital money through a credit card. Share the responsibility for budgeting with other members of your household, save your receipts, periodically analyse spending habits, and be flexible. Life can be unpredictable!

However, budgeting can only take a person so far when planning finances. Sometimes certain service bills are too expensive, regardless of how much money you make or how well you try to follow a particular budgeting guideline. On the other hand, certain bills may be at unrealistic prices, forcing cuts in other financial areas and resulting in deficiencies even if you have a good budget. There is no reason why individuals and their families should face deficiencies in other areas of their finances—such as skimping on groceries—simply to accommodate Internet and smartphone expenses.

Billshark’s Role

Situations just like this are exactly why we founded Billshark. As a team of expert negotiators, we are prepared to call your service provider for your Internet connection, smartphone service, et cetera, and negotiate on your behalf for a lower price on your monthly bill. We employ a wide selection of strategies that help us obtain savings on your bill in a timely and convenient manner. Negotiating as an individual can be a time-consuming and difficult process, hampered by the service provider’s only goal keeping your service charges the same.

More often than not, service providers are able to avoid lowering their prices for people. They are experts at what they do, so why not hire your own expert to negotiate on your behalf? Hiring a professional negotiator shows your service provider your level of seriousness reducing the price of your bill. With our expert skills, we will help you stay within a more reasonable budget, splitting the first year of savings on your bills with you and only charging if we succeed in our negotiations with your service providers.