How to Live Within Your Budget

Living within your budget can be challenging. A few simple practices can help ensure that you are successful.

Difficulty:

Moderately Challenging

Instructions

Things You'll Need

• Calculators
• Checking Accounts
• Savings Accounts
• Personal Organizers
• Personal Financial Software

1. List all of your expenses, savings and income from the past year. Use your checkbook register, credit card receipts and bills to do this. A computer-based financial program such as Intuit's Quicken may help.

2. Determine, as accurately as possible, what expenses you expect to have for the next year. You can project expenses for a shorter period, such as the next three months, then multiply by four for yearly expenses.

3. Enter this information into a ledger or computer-based financial program to accurately track your income and expenses.

4. Determine what you can reasonably afford to spend each month and then track how well you are doing by entering actual expenses into the ledger or computer program.

5. If you find that you are spending less than you had anticipated, you may want to put more money in your savings account to help out with unexpected expenses.

6. If you find that you are spending more than anticipated, try identifying the items you really don't need (new clothes, CDs, expensive dinners) and avoid purchasing them until you are back within your budget.

Tips & Warnings

• Allocate a portion of your income for savings and retirement. Retirement funds are best placed in your company's 401(k), if it has one, so that you are not tempted to tap into the money.

• You may want to set aside 10 to 20 percent of your take-home income for savings.

• Avoid trying to forecast your expenses too far into the future. Doing so can result in inaccurate budgets and overspending.