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6 Effortless Steps to Build a Better Budget

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Budgeting comes easy for some people.  They never seem to be in debt and have a healthy savings account.

But for the rest of us a budget sounds rational but isn’t easy to establish or follow.

If you fall into the latter category follow these 6 effortless steps to help you get real about your finances and on track to a better budget.

 

  1. Look at Your Bank Account and Observe Your Spending

Get to know how much you spend.  Take your most recent bank statement and observe your spending habits.

Are you an impulse buyer?  What are you spending your money on?  See any patterns that can be changed or deleted?  Ask yourself these questions and be honest.  You may be surprised at where your money is going.

After evaluating your bank statement you will have a clearer picture of how you handle money.

Now don’t get too depressed if you see you have more going out then coming in.  The tips that I’m about to share with you will help turn that around.

 

  1. Keep Track of How Much You are Spending on a Daily Basis by Making a List

Get a small note pad to keep with you and every time you make a purchase write it down.  Record what you bought, cost of purchase and date of purchase.

This is where the magic happens.

Write down the emotion you were feeling when you made your purchase.  This exercise will help put things into perspective for you.

After buying a pair of shoes how do you feel?  Do you need them to breath or was it just something to do because they were just too cute to pass up even though you have five new pairs at home?

If it looks like your spending is out of control, have a talk with yourself to get on the right track.

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Why did you buy 7 pairs of sneakers for your kindergartner for the first day of school when you know in less than 4 months he won’t be able to fit any of them?

These are the questions we ask ourselves when we get personal with our money by facing the truth every day.  Think about why you are making each purchase.

How were you feeling when you made that impulse buy—happy, sad, bored or another emotion?  Discover what you are doing to cause a lot of financial headache and start being in control of you.

Learn to address the emotion and don’t cover up by spending.

 

 

  1. Write Down Your Monthly Expenses to Include in Your Budget

One day at a company I once worked for a few years ago I witnessed one of my co-workers noticing another co-worker writing down everything she owed for that month so she could easily see who she owed and what she had to pay before her paycheck posted to her account.

The second co-worker observing this act said, “Wow, I never thought to do that, maybe I should try that.”  I was astonished.

Not only is that something that I regularly make a habit of doing before I receive my paycheck, I also just assumed everybody naturally does this.

If you are among the percentage that doesn’t possess this habit then let me break down why keeping a list is so important:

  • First, making a list gives you a visual of who you have to pay first. Your imagination and emotions can’t get the best of you if you see everyone you owe mapped out in front of you. This way you can start to create a budget that works for the month.

 

  • Second, don’t forget to calculate savings into this equation as well. Set aside a certain amount to spend on just yourself.  The last thing you want to do is get caught in a never ending spending storm and find yourself bankrupt before the end of the month.
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  • Third, now with your bills out of the way you can relax and place your energy elsewhere. For example, place your energy on enhancing your career, starting that business you dream about or spending more quality time with your family.

 

 

  1. Make a List of Everything You are Going to Buy to Keep From Getting Off Track From you Budget

Yes another list.

In the long run you will thank me when you notice extra money in your account.

Whenever you go shopping, even to the mall, write down exactly what you plan to buy and set money aside for such purchases.

A list keeps you from over spending and on track to achieving long term financial goals.  So before you make a trip to the mall, grocery store or even go school shopping for the kids write down everything you plan to purchase to keep from overspending on items you don’t need.

 

 

  1. Plan to Save by Paying Yourself First

The first 4 steps will help you to learn about yourself and how you handle your money.  Now you can see exactly what you are doing with your hard earnings and begin to make some positive changes toward growth.

No matter what happens in your life you must save.  Don’t skip this process.  Always pay yourself first.

The amount you put away for savings should be treated like a bill so you won’t miss a deposit.  Calculate a percentage of your paycheck and put that away every single month.

Most financial advisers suggest 10%.  But, if you can’t afford this then try something like $5 a week.  At least this will be good practice and you will be exercising your saving muscle.

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For more advice on saving, read this post here.

 

 

  1. Set Aside a Percentage of Money Just to Enjoy for Yourself.  Call it Fun Money!

Fun money gives your budget balance.  This is very important.  Everyone needs to purchase a want every now and then.

Spending your hard earned money only on needs eventually creates resentment.  Budgeting and saving will feel too much like work and you won’t want to participate anymore.

Fun money buys you what your heart desires. Set some money aside just for that—to spend on whatever you want.

 

If you are not used to spending on a budget try some of the following sites to keep from going over board:

  • Ebates is a great way to find greats deals and get paid for shopping.
  • Starting your own business or going back to school? Check this laptop out for under $200.
  • This 19″  TV would be great for a child’s room at only $71.

Take away…

Following these 6 effortless steps will help you maintain a prosperous financial future.  Imagine the growth and security you can accomplish by starting to budget better.

By putting these steps into action last year I was able to save a nice size cushion.  It’s a start.  A start that makes me feel secure if something where to happen that caused me a financial set back.

Don’t feel restricted following these 6 steps.  They are part of a building block that will lead you to improving your financial situation.

How do you plan to start budgeting better?

 

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Comments

  1. Doreen Platt says

    This is a very good post, especially the advice about getting in touch with what you are feeling to determine why you are spending the money. The emotional component of budgeting is often overlooked. I personally think that is why many budgets fail.

    Reply

    • Elisha says

      Hi Fiona, I’m glad you found this helpful. Just start slow. Budgeting can be overwhelming sometime but it will help put your mind at ease as far as your finances are concerned.

      Reply

  4. Jenn JG says

    These are all great tips! I really need to get back on track especially with the holidays coming, I will def be using some of your tips, especially to see what I spend daily and checking my bank account (although I may faint when I see the numbers lol)

    Reply

  5. sarah says

    These are great tips. I struggle with creating a budget since our income is not fixed. It is different every month. Paying yourself first is a sure way for us to save money.

    Reply

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    Reply

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