If you are looking to start a budget to learn to spend your money wisely and save for a rainy day, you may find it can be tricky to stick to it, particularly at the beginning. In this article, you will learn the technique which is required to stick to a budget, and learn to stop overspending.
There are several reasons why you might make a budget, and how you handle your budget depends largely on why you have one. The main two groups are those who spend more money than they make, and those who create a budget to plan how they will spend their money.
If you spend more money than you make, you may be making a budget to get your spending under control. If that is the case, your realistic options are to cut spending to fit within your income or to increase your income to cover your spending.
If you want a plan for how to spend your money, you have some leeway in your budget. Say your income is $5000 a month and your budget is for $4,000, allowing for $1000 savings each month.
If this is the case, you can also choose to cut spending or increase your income, but you also have a third option. You might decide that $1000 savings is more than you can handle and cut your plan so that you expect to save only $500 and add the other $500 to your spending budget.
The reason why you are creating a budget determines the urgency of sticking to your budget. If you’re in the first group, you don’t have a lot of wiggle room.
There is no good way to regularly spend more than you earn. If you do, everything will eventually, break down and it will impact all parts of your life.
There is simply no choice but to live within your income or increase your income. If you’re in the second group, you have more freedom to choose to keep more “optional” budget items since you have not committed all of your available income.
Budgeting is not a precise thing, especially at first. In order for a budget to be effective, it has to accurately project your spending.
The first time you make a budget, you will probably have to use your best guess for some things. Many people have no idea what they actually spend on food, entertainment and other more flexible budget areas.
If you keep copies of utility bills and other expenses, your guess may be more accurate than another person’s guess. Even so, you will probably find out after the first month that some of your predictions in various areas are not accurate.
The solution to this problem is, after the first month, to re-evaluate your budget based on your spending. Ask yourself if the problem is that you disregarded the budget in certain categories and spent more than necessary or if the budget projection is not realistic.
If you spend a certain amount of gas going to work each day, that is an expense that you can’t necessarily cut easily because your income comes from your job. If you feel that you must use the amount of gas you are using, you will need to adjust your budget to allow you to spend more on gas.
In the past, maybe you used to think about something you wanted to buy at the store and then went and got it right away. Now, you will need to wait until you have many places to go that are near each other and make one trip out of it, unless it is a matter of life and death that you go now.
It will be a challenge to your patience, but it will be so worth it when you see the money in your savings account growing larger and larger. Once you get the hang of things, saving money can be downright addicting.
Try to create a realistic budget for yourself, allow some money just for having fun. The lesson to remember is to keep everything in balance.
When you do, you will begin to be able to save and afford things in the future you never would have been able to. The feeling is worth the sacrifice.
Tommy Greene is an accomplished expert in family financial services and has been giving seminars for over 15 years. He recommends looking for Utah coupons to save money on everyday-purchases.