Many people equate the term “budgeting” to some type of punishment, but it should really be viewed as a way of gaining financial independence.
When people learn the tricks of staying within a budget, they can get the sense of security that being debt free will provide them. Plus, by staying within a budget you will be able to free up money in order to start building an emergency account, bank enough for a down payment on a home or even for a lavish vacation.
The First Step: Build a Spreadsheet
The first thing to staying within a budget is to take the time to actually build a spread sheet.
On this spread sheet you should include not only all the income that is brought into the household from work, investments or other sources as well as a master list of all expenses.
Once your budget is complete and the the two sets of numbers are linked together you will automatically see if you are in the “red” or “black” with your household expenditures and can then make the appropriate behavior modifications to set yourself on the right track.
If you are in the red, you automatically know you need to tweak some of your expenses and make the efforts to pay off the bad debt (i.e. credit card) quickly and on time. If you are in the “black” then look at how you can adjust to filter more money directly into your savings account.
With the overview complete, you are now in the position of implementing your strategy for staying within budget. Some tips include:
- Leaving your credit cards behind so you do not fall victim to shopping impulses
- On payday, take out enough cash to last you until the next paycheck and only use that money
- Everyone has vices, but enjoying them moderately will not only benefit your budget but your health. Instead of going out to a bar after work, invite your posse to your house for a pot luck happy hour featuring wine they bring!
- Consolidate your debt onto a 0% balance transfer card and take the proper steps needed to pay it off in full and not accrue any more debt
- Sign up for online banking (free with most banks) and check your finances daily to ensure you are staying on track and within budget
- Find new and luxurious ways to reward yourself that does not involve spending money – eating a home made cupcake while taking a bath is just one way to treat yourself for mere pennies
Staying within budget is one of the greatest stress relievers of all times! Only when you gain control of your money (not the other way around) will you feel truly liberated!
