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Budgeting Tips

Top Tips for Developing and Sticking to a Budget

Surely you rolled your eyes a few times when your mother, father or teacher began explaining the importance of developing and sticking to a financial budget. While these wise words of advice may have fallen on deaf ears as a young adult, the older you’ve become, the more you’ve realized the truth behind these words. Developing and sticking to a budget is unfortunately more difficult than many anticipate. Because of this, try following these five tips to not only create a budget, but create one you’ll actually adhere to.

Tip #1 – Identify Your Current Expenditures

The foundational step to creating a budget that actually works is determining the amount of money you spend each week. This must include bills and common expenditures. Once you’ve identified where your money is going to, you’re able to not only create an effective and realistic budget, but also realize where you may be spending too much money.

Determine where and how much your money is being spent by creating a physical journal. Carry this journal with you everywhere you go and immediately write down each cent you spend the moment after it leaves your pocket or bank account. At the end of the week you may be surprised at how much money is going where. Many budgeting services are also available to check credit card spending. These types of services will download your spending into their program so you can track it each month.

Tips #2 – Create Easily Reachable Goals

Perhaps the most important rule when creating a budget, and an accompanying financial goal, is to set a reachable goal. While you may have a desire to have $30,000 in your savings account, when you’re starting off at $15.00 this may seem out of reach. Therefore, create smaller, short-term goals. It shouldn’t take you longer than three months to accomplish the first goal before moving on to the next. This way, your budging efforts are continually met with the rewards and sense of accomplishment that comes along with fulfilling a goal.

Tip #3 – Establish Solid Saving Deposits

While you may have a desire to put a large chunk of each paycheck into your savings account, this desire is often met with reality. Instead of creating lofty goals, set small savings account goals you can accomplish with every paycheck. For example, promise yourself to set aside 10 to 15-percent of each paycheck into your savings account. While this may not add up to a significant amount of money at first, over time these small deposits will grow into a sizable nest egg.

Tip #4 – Create Daily Spending Limits

The main reason why you must identify where your money is going so you can create realistic spending limits. If you know how much money you must spend on bills and other necessities (such as gasoline), it’s easier to understand how much fluid cash you have at the end of each pay cycle. The most effective way to keep a budget is to establish how much money you wish to spend each day and only spend that much. Many find this doable by taking out enough cash each morning – or for the week and placing each days cash in an envelope – and only using this amount. When sticking to a strict budget, it’s best to use cash instead of debit or credit cards.


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