Where Did All the Money Go: Designing a Personal Budget

While most of us will utilize plans for vacations, plans for the holidays, or plan out our weekly to-do lists, often planning how we spend our money is something we never get around to doing. Simply put, a budget is a plan, not necessarily an elaborate plan, for where to put our money. How much to spend, how much to save, what are the items needed, what are the items wanted and differentiating between the two.

If you want to get a better handle on your daily budget, a good place to start is to record everything you spend for one month. There’s no need to try to adjust your spending habits just yet. Simply write down what you spend for 30 days. At the end of the month, look at where your dollars have gone. Oftentimes, simply looking at how much you spend a month and where is more than enough incentive to embark on a new, more frugal lifestyle. Sort your list into categories of essential buys and nonessential ones. Decide which nonessential purchases you can do without. One word of caution: do not try to cut out all nonessentials at once and think you’ll be able to live an ascetic lifestyle all of a sudden. Creating an unrealistic budget is setting yourself up for failure. Modify and improve your budget slightly each month, working little by little to achieve your financial goals, whatever they may be. Make sure to include some “fun money” in your budget each month to spend on a hobby or recreation that you enjoy. Doing this will make it more likely that you stick to your budget. After all, you want to create a set of goals that you can stick to for a lifetime, not ones that will burn you out after a few months and cause you to give up.

The first step to take is deciding which areas to cut and which need to stay. A few good places to trim your budget during the first few months might be:

1. It is necessary to look into the monthly expenditures that are not necessities. This can be broken down to average expenditure for one week. Less money than spent the previous month, should be taken out – in weekly allotments. This type of personal budgeting can be used for non-necessary expenditures for the next month. If the money is spent before the week ends, the remaining extra expenditures can be cut.

2. Track how many days each week you dine out. For the first month, schedule what days you will be eating out. Be sure to choose days that work best for your schedule, and remember that it’s important to stick to the schedule.

3. You can save on clothing by purchasing one piece at a time instead of a complete outfit. Make it a habit to check out clearance items first, then discounted items before visiting the rest of the store.

4. See how much you can shave off your budget by taking the time to compare shop for the best rates on necessary services such as trash pick up, interest rates on credit cards, satellite or cable and phone.

5. Withdraw cash only from your bank’s ATM machines to avoid extra charges.

6. A great way to not buy unnecessary things at the store is to make a list and not vary from it. Once you get used to getting only what is on your list, you will realize a financial savings. It is easy to pick up things you think you might need that are not on the list, but always remember that you can go back again and get those things if you really need them.

Overall, remember reduce stress by starting with a snap shot of where you are spending money now, make a budget in increments, allow yourself a few luxuries as you go, don’t be too hard on yourself. You want the budget to work over the long term. Create successes for yourself in the beginning, reevaluate over a period of several months, and a new lifestyle will emerge where you will be more in control of your spending and have less wasteful spending that will generate more cash flow for you as well.

One thought on “Where Did All the Money Go: Designing a Personal Budget

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