How to Stay On Budget
Dave Ramsey, financial coach, points out that budgeting is really "just spending your money with intention." He suggests spending all of your money on paper before you spend it in reality and padding your grocery category, since most families exceed their budget in this area. Keep your budget intact by using these strategies to help you stay on track.
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Instructions
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Start an "emergency fund" to protect your household budget from monumental unexpected expenses, such as a medical crisis or job loss. Deposit funds each month into a new account that is not linked to an ATM card or to your regular checking account; this account will be your emergency fund. Avoid using the emergency fund unless it is literally an emergency or crisis.
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Visit the ATM only once a week to control your cash-spending. Examine your previous cash purchases by collecting and reviewing your receipts. Tally how much cash you tend to use weekly. Each week, take out that amount in a lump sum, such as $100. Withdrawing lump sums of money will make you conscious of your spending. Frequently withdrawing smaller amounts, such as $20, might seem insignificant at the time, but adds up by the end of the month.
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Enlist a friend or family member who you can be accountable to when following your budget. Like dieting, being accountable to another person helps you stay on track. Reward yourself for good behavior with free or low-cost recreation and entertainment nights, such as cooking dinner and watching a movie at each other's homes.
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Start a "dream jar" to advance a future goal, suggests Cindy Morus, founder of the website MoneySmart Woman. When you grocery shop, remove one nonessential item from the cart and deposit its' dollar value into your dream jar. When you've collected what you need, use that money to accomplish your goal.
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Keep several months of your bills and receipts to track your spending history and to get a realistic estimate of your expenses. Put all receipts in a jar to tally at the end of the month to monitor cash spent as well as card purchases. Calculate all regular monthly bills along with receipt expenses and adjust your budget categories accordingly. Add a little padding to each category for rising costs or mistakes in your estimates.
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Limit spending by determining what you can do without, but do this gradually. Do not try to eliminate all nonessential spending at one time, which can make your budget too restrictive.
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Stay goal-oriented. Think positively about your budget by reviewing your goals every few months. Delaying gratification now means bigger rewards later.
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Tips & Warnings
Put your monthly entertainment and grocery money in separate envelopes to limit spending. When the money is gone from each envelope, you are done spending for the month.
References
- Good Housekeeping; How to Stick to a Budget; Kelli B. Grant
- Market Watch; Perception is Half the Budget; Andrea Coombes; July 30, 2006
- "Kiplinger"; 10 Tips to Build and Stick to a Better Budget; Janet Bodnar; April 6, 2011
- "Kiplinger"; The Trouble With Budgets; Erin Burt; May 14, 2009
- MSN Money; Save Your Emergency Fund for the Real Thing; June 2007
- DaveRamsey.com; The Truth About Budgeting; Dave Ramsey; August 2009
- Photo Credit Thinkstock/Comstock/Getty Images
