A Guide to Creating and Sticking to a Budget

It’s no secret that a lot of people aren’t exactly thrilled by the idea of creating a budget. They’ve been made to believe that a proper budget leaves no room for anything remotely fun.

This is not the case. A budget doesn’t need to be a document stopping you from ever enjoying yourself again. On the contrary, a budget can let you have more fun by helping you avoid the kind of stress that comes with overspending. When you know how much money you have coming in and how much is going out, it’s easier to justify those extra expenses without worry.

Yes, everyone’s financial situation is unique, but everyone can still benefit from making a budget and finding ways to save money. Anything from making your morning coffee at home to purchasing an apartment insurance policy will give you more opportunity to enjoy yourself. These tips will help.

Choose Your Tools

You have a few options to choose from when deciding how you’ll make your budget. Each has its own pros and cons, so the one that’s right for you will simply be the one you can confidently update and manage on a regular basis. The most common options include:

  • Notebooks - Recording your budget Bookkeeping, Accounting, Taxes, Settlement, Calculatorin a notebook is a very cost-friendly option. Of course, you run the risk of losing the notebook, so it’s best to make copies.
  • Spreadsheets - You can easily find budgeting templates for Microsoft Excel or other popular spreadsheet programs online. This method is useful because it can do your math for you.
  • Free Programs - It’s also easy to find free budget and personal finance programs online. Many give you the choice of separating expenses into different groups. This can help you find the areas where you might be overspending.

Once you’ve decided which tool is best for you, it’s time to move on to the next step.

Setting Goals

You should establish key long- and short-term goals when creating a budget. Setting short-term goals helps you save money now that can make it easier to reach your long-term goals in the future.

Don’t just think of your short-term goals as saving for a trip to Paris or expensive concert tickets, though. You definitely should budget for these, but it’s especially important to build a budget for basic daily, weekly, and monthly expenses. Long-term goals may include buying a home, getting out of debt, or saving for retirement.

Calculate Your Expenses & Income

Calculating your income may be easy if you’re on a fixed salary. However, it can be more difficult if you’re a freelancer or involved in work that doesn’t have regular pay rates. If this is the case, you may need to track your income for a few months to get a sense of how much you earn each week, month, and year on average.

Calculating expenses may be a bit trickier. First, you should factor in basics like rent, debt payments, and other regular expenses that remain consistent throughout the year. You should also add in discretionary items like subscriptions to streaming services, magazines, and other fixed expenses for things you don’t “need.”

You might have to track other costs regularly to determine how much you spend on average. For example, you’re probably not spending the exact same amount of money every time you buy groceries or fill up your gas tank. Track these costs over a few months, though, and you’ll find patterns that make it easier to determine the average.

Stick With It

Once you know your income and expenses, you simply need to make sure you’re spending less money than you’re earning.

That requires commitment on your part. You need to be sure to update your budget regularly. You also need to exercise some discipline in your spending habits. Most Americans don’t have enough money saved to cover a $1,000 emergency.

Don’t put yourself in this situation. Money woes are the number one cause of stress for Americans. Luckily, you can avoid the stress and be prepared for whatever life throws at you. When you set a budget and stick to it, you can relax and enjoy your money, instead of worrying about it.

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