If you're thinking of making a budget, it's important to consider the factors that lead to successful personal budgets. After all, what's the use of having a budget if it doesn't accomplish its purpose. Fortunately, successful budgets share certain elements and factors that you too can incorporate into your own budget.
Communicate With Your Spouse
Couples with a successful budget work in agreement. If you're married, it's important that both, you and your partner, live by the budget. If one partner is not in agreement and over spends, the budget will not work. Therefore, sit down together and prioritize the categories that you need to include in your budget. If after making the budget, you notice that you're going over the budgeted allowance for a certain expenditure, sit down together and rework the budget.
When creating the various budget categories, don't forget to include entertainment. If you have a budget that is too rigid, you're more likely to become frustrated and eventually deviate from it. Whether it's eating out or some other type of entertainment, figure it into your budget. Don't spend more than what your budget allows.
Use the Envelope System
The envelope system is another common factor of a successful budget. If you're thinking that the envelope system is old fashioned, it is. But you know what? It works. If you deposit your entire check into your bank account and use your debit or ATM card each time you make a purchase, it's easier to go over budget.
Designating an envelope for each category, such as groceries and entertainment, helps you keep track of your expenses. Once the cash in the envelope is gone, you have to wait until you put more cash in that envelope.
Create an Emergency Fund
According to Dave Ramsey, Financial Analyst, setting up an emergency fund is the first step to achieving financial independence. If you have other debts, strive to set aside $1,000 for emergencies. This way, when a true emergency occurs, such as unexpected car repairs, job loss or a medical emergency, it won't through off your budget.
A successful budget is not always easy to follow, particularly if you're paying off debt and you have a tight budget. However, it's important to stay focused and concentrate on the end result. If your goal is to be debt free, think of all that you can accomplish once you pay off your bills.
Make a Budget
- Add all your monthly income.
- Make a list of all your monthly expenses, such as food, shelter, transportation and utilities. If you're current on other debts, include the monthly payments as well. Add all the figures.
- Divide your total expenses by 4. That is how much you need each week to pay your monthly bills.
- Subtract your monthly expenses from your monthly income. For instance if your monthly income is $2000 and your monthly expenses add up to $1800, you have $200 dollars left that you can use toward paying off debt.
- Make a list of any other expenses or debt, such as credit card debt, student loans and auto loans. List them from smallest to largest.
- Take the difference - income minus your monthly expenses, and use that to pay off your smallest debt. Once you pay it off, concentrate on your second smallest debt. Paying off one debt one at a time will help you stay motivated and help you stick to your budget.
There you have it, the basic elements that make up a successful budget. As you can see, having success with your budget does not require any special skills and is not costly. Individuals who live by a budget will tell you that one of the most important elements of achieving success is motivation. If you can manage to stay motivated, it will help you stick to your budget and focus on the advantages, such as getting out of debt and the ability to save more. Most importantly, though, you get rid of all the stress associated with debt and enjoy peace of mind.
Copyright © 2011 Ana Jackson. All Rights Reserved. Reproduction in whole or in part constitutes plagiarism, is illegal and strictly prohibited.