How to Make a Budget and Stick to It
by Melissa Batai on February 24, 2014
When my husband and I were first married, we didn’t have much money coming in. Our expenses were fairly straightforward, and we had to stick to a budget or we would go into debt because we didn’t have enough money. Then, when our income increased, we became a bit lazier about money–until we had children.
Suddenly keeping track of our finances became even more important because our money went to so many different places directly as a result of having kids–diapers, formula, daycare, doctor’s appointments. Then, as the kids got older there were little expenses at school like milk money, presents for teachers, field trips, birthday party presents.
Regardless if you’re single, DINKs. in a committed relationship, or a family with children, creating a budget and sticking to it is essential if you want to be financially secure. Here are some steps to get you started.
Think (and talk!) about your spending honestly
In my experience, most budgets fail because the individuals aren’t reflecting on their spending honestly . For example, if your family spends $900 on food every month, but you only budget $600 because that’s what you’d like to spend, your budget will fail.
When we started really budgeting, we thought of our first few months as a dry run. We created a budget based on what we thought we spent (not what we wished we could spend). At the end of the month, we checked what we actually spent.
We did this for two or three months, and were able to get a good idea of what our actual expenditures are. (Another idea is to go through the last 3 or 4 months of credit card bills and your check registry to assess your spending, but some people don’t have time for that.)
Use budgeting software
There are many, many types of budgeting software available – from Mint.com to Pear Budget to You Need a Budget (YNAB). Mint.com is free to use, Pear Budget costs $4.95 a month, and YNAB costs
a one-time fee of $60. Pick the budget software that works best for your situation. (Some software like YNAB let you try it for free first for a month.) You want the software to help you manage your budget, not frustrate you!
Track every penny you spend
While this sounds tedious, it doesn’t have to be. I like to use my smartphone to record my expenses as I spend. A program like Mint.com can track your spending for you. If you don’t have a smart phone, try to keep all your receipts. At the end of the week, enter your spending into the budgeting software. This doesn’t have to take more than 15 to 20 minutes weekly.
“Sit down” with your budget once a month
As Dave Ramsey says, in most families there is a free spirit and a budgeting nerd . I happen to be the budgeting nerd, and it’s a title I hold with pride. My husband is the free spirit who could care less about finances as long as the bills get paid every month. We have a brief budget meeting once a month. This doesn’t last longer than 30 minutes (usually 15), and it consists of me running the numbers by him for the upcoming month and getting his input on any important financial decisions we need to make.
If you’re single, it’s still important to “sit down” with your budget once a month. Go over your expenses and reflect on what’s upcoming. It will make a huge difference in the long run.
Don’t give up.
Learning to live on a budget doesn’t come easily to most of us. Give yourself time to adapt. You may need 3 to 6 months for budgeting to feel natural to you. Keep with it, though, because when you learn to budget effectively, your money can grow in ways you never would have thought possible. You’ll be in charge of your money rather than your money being in charge of you.
What strategies do you use to create and stick to your budget?Source: gogirlfinance.com