How To Create a Real, Working Budget
Having (and sticking to) a budget is one of the key ways to become debt free and manage your money well. Yet plenty of people who try to run their finances according to a budget fail, and that’s probably because they’re making common mistakes that mean failure is much more likely. Here are some key features of a successful budget to help you out when planning where your money will come from and where it will go:
- Make sure categories are appropriate for your personal situation, rather than just copying categories from somebody else’s suggested budget categories.
- Don’t forget to include expenditure that doesn’t happen monthly - for example, maintenance costs of your car which might only occur twice year.
- Ensure that you take account of cash that you spend as well, not just what gets put on the credit card or you write checks for. It’s easy to “not notice” the couple of dollars you spend on a coffee each day, but it adds up quickly throughout the month.
- Include “savings” as an expenditure category so you can “pay” into your savings account (or investment or emergency fund, for example) the same way as you would pay a bill.
- Don’t make the categories and information required for tracking your spending so detailed that you give up doing it because it’s too labor-intensive.
This entry was posted on Monday, February 23rd, 2009 at 4:59 am and is filed under Budgets & Money Management. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
