For those who aren’t independently wealthy, the art of budgeting is a specific science. There are some things though that can wreck your budget before you are even aware of a problem. These include:
1) Forgetting to make allotments for the “little expenses” like gifts, snacks, and emergencies. Setup a miscellaneous account specifically to help pay for these pitfalls before they arise.
2) Having your budget fit an ideal person or family instead of yourself and your family. Don’t budget for a a lunch work week if you know that three days a week you are going to be tempted and run in just for that quick cheap value meal. It may only seem like a $3 slip, but it will add up over the year. Make the budget fit the family instead of the perfect scenario, its easier to reform your expenses that way.
3) Cutting costs a little too much. This happens when there is no leeway in the plan and you need to dip into savings just to get by because you forgot to budget out for office lunches or gas money was more than you thought. Also plan for the unexpected “surprise” office collections that always come around.
4) Not keeping track of expenditures. Yes, you have all this down in your little budget book, but not writing down what you really are doing could bring your budget crashing down only weeks after its begun. You simply must be able to account for your cash flow at all times, it is the only way to make it go where you are striving for.
Budgets are hard, don’t make yours harder than it should be.
A budget doesn’t have to be a death sentence to fun or having a life. It really is just a simple and efficient way to get more out of, and less worry from, your money.
Step One- Setting Goals
Be specific and set both long-term and short-term goals for the future. School? Vacation? Car? With goals, it’ll be easier to see where the savings is going and by how soon you need the money.
Step Two- Estimate Your Income
Find out all income the household brings in and categorize where it comes from. DO NOT count in “maybe” things like bonuses, perks, tips, etc. Count only on permanent moneymaking ventures. This would include, but not be limited to, Wages, profits of a business or farm, interest, dividends, and alimony/child support.
Step Three- See Where The Income Goes
Make a list of where your money goes and how much. Keep records of expenses and put back money before expenses are paid out. Keep these extra savings separate, preferably in an interest bearing account, so that they will grow each pay period and you will have greater money flexibility.
Step Four- Set Aside for Emergencies
Set apart a small amount each month for emergencies and extra goal expenses. Put down not only how much the future goal will be, but also the date you would like to achieve this goal. This may included the down payment on the car or house, and the summer vacation.
Step Five- Debt Relief
Earmark a set amount each pay period designed exclusively for bills and past due debts. Review your money management and see why you are in this predicament. Avoid any further credit purchases until you have paid off the previous debt.
This budget, while good for some families, will not be good for all families. Please adjust and take into account your families special needs.