How to Budget Money – Proven Tips & Advice

26
July

Budgeting your money wisely is one of the most important keys to financial success. While many people view the word budget as something that will restrict their spending fun, if you don’t tell your money what to do, you will end up wondering what happened to it. By spending your money on paper before you ever get it, you will be ahead of the game and you will be prepared when unexpected expenses occur.

Before you even develop a budget, though, it is important to spend some time writing down everything you spend. If you do this every day for a month, you will have a good idea of how you are spending your money. For most people, this exercise is an eye-opener and it helps them to know where to tighten their belt. It also acts as a starting point for knowing how much to budget for certain expenses.

When you first create a budget, you’ll find that you will have to tweak it from time to time as you get a handle on how much you are actually spending for various expenses. You will also find that you can do without certain things. For example, once you start writing down every coffee and snack that you purchase, you will be amazed at how much money is literally flying out the window. Then, you’ll be able to develop different habits to coincide with your financial goals.

Most people find that it is harder to spend cash than it is to use plastic to pay for things. Many people who are on a strict budget use cash for things like groceries and incidentals so they can easily track where their money is going. Some people use an envelope system, whereby the money allotted for each category of spending is put into an envelope.

As you develop your budget, be sure and plan for those expenses that do not come up every month, but are inevitable expenses. For example, decide how much you will spend on gifts for the entire year. This includes holiday gifts, birthday gifts, and gifts you contribute to at the office, etc. Once you have a yearly figure, divide this by 12. Now, you know how much to budget each month for gifts and you won’t get caught unprepared. You also won’t spend too much at the last minute by charging at item you really can’t afford. By planning ahead, not only will you have the joy of giving, but you can feel good about the money you spent because you planned for it.

You’ll need to do the same thing with other expenses, such as taxes, car registration, and any other expenses that occur once a year or every now and then. Figure out how much you will spend over the course of a year on this category and then divide that figure by 12. You won’t believe the peace of mind you’ll have, knowing everything is taken care of. Instead of getting caught having to pay for expensive car repairs one month, set aside a certain amount of money each month for your car fund. Whatever is left at the end of the year can go into a savings account for a down payment on your next vehicle.

The same concept that applies to expenses you’d rather not think about, such as car repairs and taxes, also applies to fun stuff, such as vacations. Decide how much you can spend this year for a family vacation and then set aside an equal amount each month until you have the money to pay for it. Not only will you ensure that your family can go on a fabulous vacation, but you won’t incur further debt because you’ll be paying for it with cash.

Communicating with other family members is essential if you are going to successfully budget your money. It will help if everyone can be on the same page. By planning for the fun stuff as well as for emergencies, you will not only be able to meet your expenses, but you will be motivated to monitor your spending habits at all times.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

Email  • Google + • Twitter

Comments are closed.