The word “budget” can have such a negative connotation, but understanding its benefits can influence may to think otherwise. Look at budgets as being the key to a smooth operation. When operating on a budget, we are forced to handle our needs and, in most instances, neglect our wants. If there’s money left over from a planned budget, it shouldn’t be used in its entirety. Use only a small percentage of the remainder and place the untouched portion into next month’s budget. Cut back on the small things- cutting back on unnecessary items can make a difference. The amount of money spent on little things add up and eventually equal the price of purchases you’ve vowed to not buy while on the budget.
If you are serious about saving money and watching it grow, then being honest and accepting the facts is crucial. It’s said that the first step to overcoming addiction is to honestly- admit there’s a problem. That, the same, principle can be applied when living on a budget. Take out all the receipts you have on hand and calculate the amount of money you’ve spent during that period. Count the cash you have on hand, then check your account. If you have more money going out than what’s currently in-house, then that is a tell-tale sign that a budget is needed.
Another way to tell if a budget is right for you is to think hypothetically. If an emergency was to occur within a day or two would you be financially prepared? Doing this may damper your mood but it will give you an understanding of where you are financially.
The next phase to creating a budget is to identify all of your expenses. Start with the major expenses then work your way down to smaller expenses. Next separate your necessities from the extras. Identify the expenses you can cut back on. Add up the amount of money you spend on your necessities and then do the same for your ‘extras’ list. Next, subtract your necessities budget from your monthly income. From that amount, subtract the extras. If you have money left over, there’s a good chance you’re in good standing.
The more you practice budgeting the more money you will learn to save. The key to being a successful budgeter is to see everything for what it is and is not. Having that level of understanding will encourage you to do better.