Budgeting Tips
Money is a funny thing, if you don't decide beforehand where you want it to go, it will still go. An old friend mine use to say, "money is like gas it expands to fill the space". If it's a small space it fits that, if it's a large space it fits that.
There always seemed to be more month than money and he never seemed to have extra. Even at the times in his life where he lost income, he always seemed to make it work or just barely get by.
Over the years because of a unique position I was in, I had the opportunity to look at a lot of people's finances and one thing I realized is that it doesn't seem to matter how much money you make. I would see the family making $20-30,000/yr doing just fine and then the family making $200-300,000/yr getting behind each month OR the reverse, with the family making $20-30,000/yr getting behind each month and then the family making $200-300,000/yr doing just fine, along with every income level in between.
So what matters is not how much you make, but how you manage the money you do have.
There's an old saying that rings true when it comes to budgets, "If you fail to plan, you plan to fail". A budget is a plan for your money, so let's learn how to plan.
To follow a budget, you need to first establish where you are. So a budget that has both an "actual" and "planned" section is what you re after. What you need to do is list what you're currently spending and then right next to it list what your budget goals are or the budget you want to follow.
Some points to remember:
Your income should equal your expenses. If not, the extra will disappear or "expand to fill its space". Your goal is to live under your means, so any extra should go to debt first and then savings.
A "spending cash" item is essential. For example, say you only have an extra $5 every month, but you don't budget it and so when you're out you stop and buy something to eat and then your spouse does the same and now you're over the budget.
Now, if you knew you only had $5 most people would only spend $5. Personally, there's been times in my life when the budget only allowed $5, so my wife got $2.50 and I got the other half. But there's also been times when the budget allowed for hundreds of dollars.
Reality is that most will blow money anyways, so always set aside something no matter how small, the trick is to not be surprised at the end of the month and know what you're going to spend beforehand.
Another point is to budget for a set time period, usually in accordance with your pay schedule. If income and expenses vary from week to week or month to month, prepare a new budget each pay period.
Remember "If you fail to plan, you plan to fail".