Creating a budget for yourself or your family isn’t really that tough. There are numerous smart phone apps and software programs that make this about as difficult as slipping on a sheet of ice. For example, the smart phone app Mint will track your spending then divide everything into categories. The software program You Need A Budget will not only help you create a budget but has four simple rules that could help you become debt free. Other smartphone apps that would help you develop a budget include Expensify and Easy Envelope Budget Aid.
The importance of having goals
Before you create your budget, it’s important that you estabish both short-and long-range goals. For example, a short-term goal could be to buy a new car, while a long-term goal might be your kids’ education. The reason why it’s important to have goals is because without them, it’s almost impossible to stay on a budget. But if you have written goals and can see you’re making progress towards achieving them, this can be a great motivator to help keep you on track.
Where to make cuts
Okay, you’ve tracked your expenses for the month, you’ve organized them into categories and presto! You have a budget. However, next comes part two – deciding where you can make cuts. Most people find the easiest categories to reduce spending are food, clothing, eating out and entertainment. However, if you put your mind to it there’s probably no category where you couldn’t make cuts. In fact, you should go over every category at least twice looking for places where you could cut your spending. You just might be surprised at how much money you could save if you put your mind to it. If you need help in cutting your budgeting here’s a video with 10 good tips for finances and budgeting.
Sticking to that budget
Many people learn that the even harder part is to stick to a budget. Here are some tips that could help you live according to your budget.
- Post your budget in a visible place. Put it somewhere where everyone in your family can see it – maybe on your refrigerator or a bulletin board in your family room.
- Make a note of every dollar you spend, every time you use your debit card, go to an ATM machine and every check you write. Get out your budget and refer to it regularly to make sure you’re staying on track. There will undoubtedly be times when you overspend in some area. Just relax and reduce your spending in another area to compensate for it.
- When your kids ask for things that are not in the budget, remind them why your family is working to spend less. If your kids are teens, they might even be able to earn the money they need for the things they want.
- Keep that smart phone app (or a notepad) with you at all times and continue to write down everything you spend money on. Keep all of your receipts, too. At the end of the month, you will need this information to evaluate how well you are doing in your budgeting.
- Remind your family why you’re budgeting Get out that sheet of your short- and long-goals. Remind them why they’re saving money now – for their college educations or that new car.
If you’re overspending
If you overspend of if your total spending was more than you had budgeted, try to figure out why this happened. The reasons for this could include:
- When you developed your budget you over looked an important living expense or debt
- Your budget isn’t realistic. If your budget is too Spartan, it may be impossible for you and your family to live on it.
- You didn’t try hard enough to live according to your budget. If you want to make your budget work, it takes a 100% commitment from everyone in your family.
- You had an unexpected expense that month. Maybe you had to work late at the office so that this increased your childcare expenses or maybe your car broke down.
- There were expenses that increased through no fault of your own. For example, the cost of gas went up or maybe your insurance premium increased.
- You saw a drop in your income. Maybe your sales commissions wasn’t what you thought it would be, you had to take a cut in your pay or a client failed to pay you that month.
Your budget should be a game plan
If you find that you’re overspending in some categories and under spending in others, don’t be afraid to make changes. Your budget should be more like a game plan than a restraint. It should change as your life and your finances change — we hope for the better. The good news is that if you do stick to that budget, you’ll get your debts paid off quicker. Plus, the day will come when you’ll be able to add some extras to that budget – such as things you had to give up for now. You may also be able to start saving more money so that you’ll have an emergency fund that would tide you over next time you have one of those unexpected expenses.
Don’t give up
The important thing is to never give up. Sticking to a budget isn’t easy, especially when you have a family that needs to buy into it. You may have to become something of a nag for the first few months – constantly reminding your family members how much you’ve budgeted in certain categories and why it’s important that they stay on budget. But if you don’t give up, you will succeed and your life will get much better.
