Work to determine at the start of each month how much money you’ll spend in each spending category.Īfter that, track your spending to be sure you stick to your budget. Different months often bring different budgeting needs.įor instance, you might have a special trip to the opera one month that you wouldn’t normally take. Do this for each category of your spending. One way to avoid the pitfalls of “disappearing” money is to set new monthly budget percentages each month. Once the money is gone, you’re finished spending in that category for the month. Why? Because you commit to only using the money in the envelope for those expenses. This will help you ensure you’re not spending over the allotted amount in your budget. Use it for groceries, entertainment, meals out and other flexible spending categories. Try using a cash envelope system for fluid expenses. In the process, they incorrectly assume that they simply don’t earn enough to “make it.” This reality leaves a large percentage of people wondering where their money disappears to each month. However, at the end of the month that “little bit” adds up to a whole lot of your paycheck. Today’s banking technology means that it’s a whole lot easier to spend a little bit of money each day. Instead, it’s only a line on your digital bank statement. So it’s very easy to forget that it’s the same money that you work so hard for each week. When using credit or debit cards, you don’t actually see the money leave your hand as you make your purchase. Money is easy to waste, especially in today’s plastic-driven, app-driven virtual banking society. Consider Using Cash For Monthly SpendingĪnother personal finance tool that may help you stick to your budget is the cash envelope system. Why? Because unaccounted money often means wasted money. Just make sure that your percentages add up to 100% each month.Ī “zero-based” budget” ensures that every dollar has a “job” and that no money is left unaccounted for.
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So are you ready to give it a try?įeel free to tweak the percentages we suggest to fit your particular spending goals. However, I’d be willing to bet that the excitement over the savings you gain by having a plan for your money will set in fast.Īnd it will far outweigh any pre-budget sense of restriction you might feel before you start using these powerful financial tools. Working on and living within a budget and tracking your spending may seem restrictive at first.
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It will work for you whether those goals are saving money for a house, paying off debt or working toward financial freedom. With controlled spending, you have more money to put toward your financial goals. With a pre-set budget, you have a number to aim for that will help ensure you’re making efforts to control spending. What if you track your spending without first setting a dollar amount goal for each category? If so, you can easily spend more than you would like to in one or several categories. Groceries, entertainment and restaurant expenses are the three areas we struggled with the most. This can be especially challenging in certain spending areas. If you create a budget without tracking spending, you’ll have no idea if you’re staying within the budget you’ve allotted for each category. As you plan your monthly spending, don’t just use one or the other. It’s important to use a budget and track spending together as a team. I know money is important but because of that mistake, we’re still working to pay off the debt we accrued from not budgeting. So a lack of budgeting and not tracking our spending had a huge impact on our financial situation. We assumed we were spending about $100 a month on eating out. In reality, we were spending about $900 a month. We assumed we were spending $600 a month or so on groceries. When we decided to go back and add up our previous annual spending, we were floored at what we found.
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Instead, I made an estimated budget each month and assumed we followed the numbers. The problem was that I wasn’t tracking our spending. We couldn’t figure out why we were in the hole each month.Īfter all, we weren’t making large purchases. In our particular case, it was a simple lack of budgeting and not tracking spending that got us into that debt. My family and I used to be saddled with over $60,000 in consumer debt. Remember that it’s important to tailor your budget to fit you/your family’s personal needs and lifestyle. The area you live in (cost of living varies from city to city) and what your financial goals are will have an impact too. Your budgeting percentages may vary from these suggestions due to the size of your family. Here are some guidelines that will help you to make your budget.