Creating A Budget

Most of us know budgeting is important, but it’s not always easy to stick with. Budgeting’s bad rap often comes from trying to live within unrealistic budgets. However, creating a budget that works for you will help you see firsthand the benefits of this important financial tool.

Try some of these budgeting tips to help you develop a realistic working budget:

Be Your Own Auditor: The best budget is built on an honest and accurate view of your financial situation, so your first step should be to organize your income and expenses. It’s easy if you make a list that is divided into four columns:

- Income: List all of your income, including tax refunds, bonuses and other irregular forms of income.

- Set payments: These are bills that are the same amount each month and include your mortgage or rent, auto loans, and insurance.

- Adjustable expenses: These are things you need like food, gasoline, and heating expenses. They are adjustable because you can tweak how much you spend on these items each month.

- Discretionary spending: This “fun money” includes things like entertainment costs, a morning coffee, or clothing.

Use your receipts or online statements to get an idea of how much you spend in each category every month.

Set Some Goals

Setting financial goals helps you prioritize your spending. Goals that lead to personal financial security might include:

- Paying off credit card debt

- Establishing an emergency savings account

- Using cash instead of credit for holiday gift giving

- Spending less on groceries or cable and internet bills

When you have goals, it’s easier to stick to a budget.

Use Budget Apps and Bill Pay Services

Smartphone apps make paying bills on time or making savings deposits easier than ever. Most banks offer a free bill payment service, as do credit card and utility companies. Save yourself the cost of a stamp or the time it takes to pay bills by phone by setting up online bill payments.

Check out your phone provider’s app store and look for apps that:

- Alert you when your credit card bill is due

- Warn you when your checking account balance is low

- Track your spending

- Graphically represent your budget and spending.

Start Using Cash

Using cash is a great way to control spending. Once you have set up online bill payments, use cash for the rest of your expenses such as grocery shopping, fill-ups, and household expenses. Withdraw the amount you have budgeted and place it in a marked envelope. When it’s gone, it’s gone—along with the possibility of overspending.

If you are uncomfortable with cash-filled envelopes, you can purchase a reloadable credit card. Simply load the amount you have set aside for each budget category and refill it each month. Try the same thing for holiday shopping.

Creating a budget that works for you makes it much easier to reach your financial goals and enjoy the satisfaction that comes with having your finances in order.