Your family has decided it's time to create a budget. You're maybe spending too much each month, or you may not even know where your money is going. A budget can help solve both problems.
A budget can also help you get your finances under control. You can get out of debt and find the funds to pay for that new car, a much-needed home renovation, or a down payment on a new home. Here are some strategies you can use to create a good budget plan.
1Determine The Purpose Of The Budget
Why did you create your budget? Keep in mind your reason for creating a budget in the first place. Surely, your intention wasn't to create a budget so strict that there's no wiggle room for entertainment or an occasional ice cream cone!
Your goal is to be wise about how you spend the money that you receive each month. True, this may mean that you would have to cut back on discretionary spending. But the ultimate payoff is being able to do the things that you sincerely want to do.
2Make Your Budget Simple
If your budget is too difficult for even a financial genius to understand, you won't stick with it. Your budget should be simple enough to understand, so you'll be able to use it and adjust it when necessary. The easier it is to use and manage, the more likely you'll be to stick with it.
3Be Realistic With Your Budget
Is your budget realistic for you and your family? If you're planning to cut all your expenses at once, you may be trying to do too much too soon. Start making small changes to how you spend money.
Do this instead of broad, sweeping changes that are unreasonable. Small budget changes are easier to maintain than large ones. Remember that everything in moderation brings the best results.
4Include Short-Term Goals In The Budget
Short-term financial goals can make a living with a budget easier. These are goals that you can reach quickly. Perhaps, you have several low-balance credit cards that you'd like to pay off before tackling the high-balance cards, or you could also work on paying off the credit card with the highest interest first. Whichever way you choose to pay them off, you'll need to find extra money each month by cutting down on other expenses. To pay off your credit cards using short-term goals, pay the minimum payment on all credit cards except the one that you're trying to pay off first.
Pay a little bit extra in principle for that card each month, and before long, that card will be paid in full. Next, contact your credit card company and negotiate better rates. You'd be surprised to see how willing they may be to adjust the interest rates or payments. You can also consider getting a personal loan or line of credit and pay off all high-interest credit cards. You'll save a bundle in interest payments.
5Include Long-Term Goals In The Budget
Do you have concrete, long-term goals? Are they within your budget? Have you determined to pay off a high-interest, high-balance credit card before you go on a vacation that you dream of?
Get posters or photographs of that destination. Put them where you can see them throughout the day. This will help you stick to your budget when you want to spend money on things you maybe shouldn't.
Sticking to your budget by following these simple strategies is possible. Remember, however, that once you get your finances under control, it's not a reason to revert to old habits. Following a budget won't always be easy, and there may be times when you have an emergency that makes you deviate from your plan.
If that happens, get back on track as soon as you can. Before you know it, all your sacrifices will have been worth it when you realize that your dreams are within your reach. Start creating a good budget plan now!
Jackie Wing is an Alaska native, who enjoys snowboarding more than is probably socially acceptable. She lives in Anchorage with her two dogs Reese and Peanut, or as she likes to call them "Thing 1" and "Thing 2."