Making a budget
Most people who do not live from a budget will tell you they know exactly where all their money is going. This is how someone can get into debt very easily and that obviously tells me that they do not know where their money is going.
The things that usually cause people to go into debt are unplanned expenses (medical bills, house expenses, etc) and unnecessary purchases (new cars, vacations, etc). Working from a budget can usually help in these areas.
Here are some steps to follow as you tackle your budget:
1. You will want to track expenses, but I like to take a somewhat different approach to start. First, make a budget of what you think your expenses should be. Be sure to include items for miscellaneous purchases and eating out.
2. At the beginning of the next month, keep every receipt for everything that you buy. Do not work from your budget yet, just spend as you normally would. At the end of the month, categorize your items and see how close you came to your first budget. It will probably be enlightening. At this point, adjust your budget as necessary.
3. Use tools to help you, especially if you are not organized. Remember, tools do not have to be fancy. Maybe you have a zip-lock bag in your purse and all receipts go in that. Also, a spreadsheet can be very helpful.
4. Make sure your significant other (if you have one) agrees with the plan too. Sometimes budgets do not work because someone in the family will not follow them.
5. Be disciplined, especially at first. Spending can be addictive, and sometimes getting spending under control is extremely difficult. If you are successful with your budgeting over a few months, this should become easier.
6. Work from a list. Most people will use a list for a grocery store, but what about when you go to the mall or department store. Stores know how to market their merchandise so you are tempted to buy it. Do you ever see those items placed in a display at Wal-Mart at the checkout? How many times have you put something in your cart you did not intend to buy because it seemed like you should need it?
7. Saving is an important part of any budget. Remember to include this category.
Working from a budget can be difficult but often times rewarding. As most people live pay check to pay check, it can be necessary. However, it can also be rewarding. Plus it can teach your children (if you have children at home) a valuable lesson.