So you have a budget. That's definitely a good first step towards financial success and responsibility, but simply having a budget is not enough. There are lots of ways to improve your budget and make it more effective. Here are five such tips to get you started.
1. Review the feasibility of your budget every month.
Each month, at the end of the month, sit down and look at how your actual spending compared to the spending you planned with your budget. Then, use your results to decide whether or not the budget you were using is still feasible for you. (Your needs can and will change over time!) For example, if you budget $300 for groceries every month but you are consistently spending $350, in spite of taking advantage of every sale and coupon you can think of, then you may need to raise your grocery budget to $350.
2. Talk about your budget with your family.
If you have a spouse or other family members, make sure you talk about and work on the budget together. Others in your family will have an easier time sticking to the budget if they feel they've had a hand in creating it. Listen to others' thoughts in deciding how to much to allocate to each category, and be willing to compromise. For example, if you think you can get by on $100 a month for eating out but your spouse really wants to allocate $200, perhaps you can compromise and leave $150 in that category.
3. Make savings a priority.
Some people write out their budget, subtract the categories from their income, and then plop anything leftover into their savings account. This is not making savings a priority. A better approach is to decide how much you need to save each month, and then massage your other budget categories to make that possible. For example, if you make $5,000 a month and want to put $500 per month into savings, you may need to cut back on your entertainment budget or eating-out budget to make that happen!
4. Check into your budget throughout the month.
You don't want to just make a budget at the beginning of the month and then check in once at the end of the month. If you've gone over budget, by that point, it's too late! Instead, check in with your budget every other day, or even daily if possible. Log all of your purchases so you always know how much you have left to spend in various categories. This is one reason why keeping your budget in a spreadsheet works so well.
5. Be realistic.
If you are a goal-oriented person, you may have a tendency to be too restrictive in your budget. This can lead to burnout over time. For example, perhaps you set the goal of spending $100 a month on groceries. While that might be possible, it's a huge challenge...and you're bound to feel deprived after eating on that budget for a few months. That can lead to a backslide into bad spending habits. Make sure your budget categories are realistic, and you'll have an easier time sticking to them for the long term. If you are single, you may want to have a friend look over your budget and give you their opinion as to whether or not your categories are reasonable.
With the tips above, you should have a better experience with budgeting. For additional advice, meet with a financial planning consultant. They can look over your specific financial situation and give you more detailed advice as to how much you should be spending on certain items and expenses.
When it comes to making things right for you and your family, there are only so many times you can struggle with finances. I didn't used to care too terribly much about finances, but after dealing with near bankruptcy more than a few times, I knew I had some big decisions to make. I started working with a financial planner to address various issues that we were facing, and we realized that there were some mistakes we kept making time and time again. After going through and evaluating our spending, we made some big steps towards clearing up our finances. Read more on this website to learn about finances.