How to Effectively Start and Stay on a Budget

When I was a kid, I remember my mom sitting down at the kitchen table once a month with a huge stack of bills and her checkbook. She would then spend the entire day exasperatingly trying to reconcile our family’s expenses and mail out checks or even sometimes hand deliver them to different businesses. While this may be the way budgeting was done a long time ago, the idea that you have to spend hours “balancing your checkbook” is an outdated notion. Budgeting is vital to financial success, and it doesn’t have to be complicated and frustrating. The key is to find what works for you and stick with it.

Track Your Expenses
To get started, for the next month, keep track of everything you spend. Try to make all of your purchases on one debit or credit card so you have quick access to an entire list of everything you’ve spent. At the end of the month, divide up all of your purchases into different categories – groceries, gas, eating out, utilities, miscellaneous, etc.

Establish Limits
Once you have your spending totaled up and categorized, it’s time to set limits. Look at how much you spent in each category and decide if it was too much or not enough to meet your needs. For example, if you spent $400 eating out, was that absolutely necessary, or can you scale it back a little to try and save money? Maybe budget for $300 instead and try to stick to that amount. If you spent $100 on gas, but you know that you won’t need that much in the future, try a lower amount and make that your goal. If you notice you are consistently going over budget in one category month after month, consider increasing the amount in that category so it’s an accurate reflection of your needs. If you notice you are always having leftover money in one category, decrease that budget amount next time.

Track Your Spending
There are many different types of budget tools you can use to help yourself get started. Whether it’s an app to help you track expenses, an Excel spreadsheet, or the old school envelope method of dividing up cash into envelopes, find a budgeting tool that doesn’t overwhelm you. Sign up for online banking and set up online accounts with all of your credit cards. This will allow you to have real-time information on what you actually have spent. Spend 15 minutes once a week or once every couple of days and add in your new expenses into your budgeting tool so you always know where you stand and how much money you have left in each category. Once you are out of money in a certain category, stop spending. Stick to the limits you have set for yourself.

Budgeting does not have to be complicated. The most important thing is to know where your money is going. Once you discover this it can help you minimize waste and start saving for the future.


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