Creating a budget helps you take control of your finances, save for a special goal or get out of debt. Here’s how to create a budget you can live with.
If you track what you spend for a month, you’ll discover where you are now. Even if you’re eyeball deep in debt, put some money aside toward an emergency fund.Then if your car breaks down, you budget doesn’t break down with it.
5 Budgeting Tips for Stick-With-It Success:
1. Why Did You Create Your Budget?
Do you want to get out of debt? Buy a new car? Repair your roof? Pay for college?
Keep your goal in mind as you prioritize your spending. Don’t create a budget so strict no one can have an occasional ice cream cone! No doubt you must cut back on little luxuries so you can achieve your goal.
Moderation helps you be wise about how you spend each month’s money. The ultimate pay off comes when you achieve your goal–you have money for what you truly want in your life.
2. Make It Simple.
A ledger with each income and outgo detail worked out with mathematical formulas might please a financial genius, but can be unworkable. Many people find success with the envelope system.
Once you determine how much money you’ll spend on food, write FOOD on an envelope and put your cash allowance into it. Label an envelope for each utility, gasoline, etc. Spending cash gives you a better feel for where your money goes and what your priorities really are.
You won’t get your amounts just right the first or second month on your new budget. By month three or four, you’ll know better what works. The easier it is to use and adjust your budget when necessary, the more you’ll stick with it.
3. Be Realistic.
There’s a good chance you can’t cut all your expenses at once. Your family can adjust better when you take baby steps toward a more balanced budget.
Groceries alone can make a major impact on your budget, for good or ill. Creating tasty, nutritious meals for less cost can take time in pre-planning, smarter shopping and more home cooking. You’ll need practice.
Start out making small changes. Everything in moderation works better than radical changes across the board.
4. Include Short-Term Goals You Can Reach Quickly.
Nothing succeeds like success. Give yourself a taste of success as soon as possible. While you would save the most money if you paid off whatever credit card has the highest interest rate first, you could gain a great psychological boost if you paid off a smaller-balance card instead.
You can then “snowball express” your other cards. If you paid $100 a month to kill off your first card, add that $100 to your payment for your next small-balance card. You’ll pay it off faster.
If you paid $210 per month on card two, add $210 to your third card’s payment. Do you see how this snowballs? You spend the same amount of money as before, but your credit cards get paid off faster and faster!
5. Include Long-Term Goals to Work Toward.
Do you have concrete, long-term goals within your budget? Do you need a new roof on your house before another season of summer storms hits? Do you want to go on a dream vacation afterward?
Yes, I know you deal with leak-catching buckets. Don’t focus on that pain. Instead, put up a photo of whatever new roofing you want for your house. Put up a poster of your long-dreamed-of vacation destination. When tempted to spend money you maybe shouldn’t, remember your photos.
Will following your budget always be easy? No. You may discover you buy pants without thinking, or office supplies, or fancy coffees. Deal with the hidden emotion behind those excessive purchases. An emergency may make you deviate from your plan. If either happens get back on track as soon as you can.
These simple budgeting tips can help you stick to your budget. At some point your new choices in how you spend money will make your dreams come true. Yay!
Don’t abandon your budget once you achieve your goals. If you revert to old habits, you’ll experience old hard times once more. Set wonderful new goals–like building wealth!
Remember, your life can only improve as you increase your skill in handling your money. Please sign up for my free report: Building a Wealth and Prosperity Mindset.