Creating a Budget and Sticking to it Guide
Everybody is pinching their wallet these days, with bank failures and job cuts being the biggest stories on the news for many months running already. |
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Though increasing one's income is always a great idea, it's not always feasible, and thus the ability to set a budget for yourself and/or your family and obey it becomes a virtue in times of hardship. Many people try doing so, but lose control of their impulses and completely flout their own guidelines. With such people in mind, this practical guide on making a budget will help you overcome the temptations that can drive your home's finances into the red. |
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Set Yourself Goals
First, you must decide how much it is that you want to be setting aside as savings on a weekly, monthly, quarterly, or yearly basis. Some people are very frugal and do not engage in a decadent lifestyle; they are more likely to set aside a fair chunk of their income. Some people don't make enough money to set aside a dime, ever, and budgeting is an absolute necessity to prevent them from entering a sea of debt. Whatever your reason for creating a budget, you need to specify what limitations you will put on yourself and your use of your income.
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Think of the Broader Picture
When beginning to draft a plan for yout budget, don't just think about what you're going to have to pay for from here to the end of the month. Certain bills, amongst which the really big ones usually figure, come bimonthly, quarterly, or yearly, like taxes, car insurance, the water bill, and vacation/seasonal expenses. You need to be thinking of monthly limits as well as yearly limits: everyday expenses will fall into the former category, and infrequent expenses will fall into the latter. |
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Start Tracking Your Activity
Creating a budget may seem easier than it really is at first; you'll be surprised at just how much those tiny purchases can add up to over time—junk food, new clothes, tips, and a whole universe of payments you previously considered to not be worth recording. Absolutely everything you spend should be written down, either in a pen-and-paper format or using computer software to set up a database, or both. Go to ChristianPF to see some options for household budget spreadsheets. |
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Analyze Your Spending Habits and Tighten Up
Just about everybody above the poverty line—and regrettably even some below it—have certain expenses that they could afford to cut out of the equation. When reviewing your personal expenditure data, you need to identify at least one or two constant purchases that are not essential, and renounce them...at least until you increase your income. If you have certain vices that require constant spending to be satisfied, now would be a good time to reconsider them: smoking and drinking would have to top the list (amazingly, habitual smokers and drinkers, in addition to damaging their health, are wasting thousands of dollars a year). For other people, it may be renouncing refined tastes in fashion, or simply eating in more often or taking a packed lunch to work. Everybody has an area of their life they could tighten up in, and this is a crucial aspect of making a budget: sacrificing. |
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Consider Getting Professional Consultation Services
This step is particularly recommended for individuals that are lacking in self-discipline. There are many organizations dedicated to helping families meet their budgetary needs and restrictions, and sometimes the objective opinion of an outsider is what a family needs to really create and stick to a budget.
One excellent site designed specifically for family budgeting needs is HomeMoneyHelp, where you will find helpful info on a broad array of household budgeting issues. |
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Managing Your Debt Properly
A budget needs to not only restrict your spending, but it needs to prioritize your spending. If you have a mortgage, put it at the top of your list of bills to pay. Groceries and health bills should come next, followed by home utilities bills.
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Afterwards, put secured loans ahead of unsecured loans, simply because the former will take to legal recourse much faster than the latter. If you find that you are up to speed on your credit card payments, but your mortgage bill is months old, you have got your budgeting priorities all wrong. |
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Covering Your Basic Necessities Intelligently
When it comes to feeding yourself and your family, there are always seasonal ingredients that will be available at discounted prices; wholesale providers where you will be able to stock up on basic, durable items at a lower price; or in store specials which you can take advantage of to increase your thriftiness. Do some research on the options available to you in your area: don't just shop at the first supermarket you stumble on, but rather visit several and discover which has the best overall prices, and which offer certain products way below the prices of others. Another good technique is not going to do your grocery shopping on an empty stomach, as your hunger will get in the way of your rationality. Though this may seem a little silly, it is absolutely true: hungry shoppers are much more reckless than their full-belly peers. For more grocery saving tips, read "Frugal Grocery Shopping on a Budget." |
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Allow Yourself Periodic Splurges
Don't overdo it, but do allow yourself a treat or two every now and then. Choose a relatively long periodicity, like once every two months, and allow yourself to spend a limited amount on frivolous activities or products that won't affect your overall savings capacity. Only permit yourself this treat if you are actually saving money; otherwise, forget the splurges. |
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Occasionally Evaluate Your Performance With a Third Party
In order to really learn how to create a budget and stick to it for the long term, you will need to adapt and asess. Every few months, bring out all the data and verify your compliance with your own budget. Get a third party—either a professional, or just a trustworthy friend or family member—to opine on your frugality or carelessness, as the case may be. Adjust for changes in the economy, including inflation, particular products being more expensive, or a pay raise or reduction. |
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