5 Secrets to Build A Budget You Want to Follow
By: Shvonne Craig
Tags: Spending Habits, Budgeting, Credit Score, Goal Setting

In addition to getting cashback on the shopping you do, people have asked me about creating a budget to make sure they are spending that money they have correctly . . . so here you go!

With the new year upon us, many people are creating new years resolutions. One of the more popular financial resolutions is to create a budget.

I’ve been doing a lot of research on creating budgets that are realistic and that someone will actually follow. I found a lot of information from authors like Dave Ramsey, Stacey Johnson and many others.

What I’ve done is boil it down to 5 steps anyone can follow because, let me tell you a little secret: Creating and sticking to a budget can give you the cash to do a lot of fun things.

Follow these 5 steps to get the budget you want and stick to it:

1: Set a goal

You wouldn’t get in your car and aimlessly drive around and hope for the best. You shouldn’t do that with your money either. Setting a goal helps you answer the question: What do you want from life?

Maybe your dream is to own your own home, take a family trip to the Bahamas or start a business.

Or perhaps you just want to pay off your student loans, or get rid of that credit card debt you dread paying every month.

The point is, as Stephen Covey put it you have to begin with the end in mind. Knowing what you want gives you a starting point and helps you focus.

2: Track your spending

If you have no idea where your money is going, how can you make it work for you?

Knowing where you spend your money is important for two reasons:

You can set a realistic budget. If you spend $500 a month on groceries, budgeting $200 a month is setting yourself up for failure. You can better identify leaks that need addressing. This could include that 2 time a day daily coffee run that eats up $150 a month.

Some people are the “it’s all in my head” type. It’s easy to remember you went to the mall and spend $50 on shoes, you may not remember that ice cream cone you grabbed on the way back to your car and the $4 you spent on it.

Remember, this doesn’t have to be hard. There are many tools out there. You can use a spreadsheet (I’ll provide a link to a couple below) or a budgeting app to help track your cash and progress.

3: Start slow

Although this is number 3, this is probably the most important step you can take to creating a budget you will stick to. Ramp up to ramping down your spending.

If you go cold turkey and deny yourself too much, after a few weeks you could find yourself running through the mall buying anything not nailed down or getting rounds of drinks for strangers at a bar.

Starts slow and be sure to add a little slush money into your budget to allow yourself to still have a little fun. A good budget takes time to get the swing of. Think marathon rather than all out sprint!

4: Schedule the goal

Without a deadline, that goal you set will forever be in an “eventually” state.

In your budget, prioritize your goal, whether it’s buying a house or saving to pay cash for a car. Work and automate a set amount monthly towards savings or debt. Save whatever you can reasonably afford each month. Even if you can only afford $10 a month, by the end of the year you’re $120 closer to your goal.

5: Monitor, monitor, monitor your progress

Once you have a budget, don’t ignore it. Compare what you actually spend with what you budgeted. It’s life and things happen; an unexpected medical expense can throw the budget off one month.

That’s okay, look at the budget and see if there are things you can move around to make up for that expense, maybe instead of spending $50 this month on clothes, you spend $25 to make up for the extra expense.

This monitoring thing goes both ways, you don’t just have to monitor to cut back. You could find that your slush fund hasn’t been touched all month. In that case, it’s time to have a little fun!

Finally, know that things aren’t perfect. A budget is a living document that you have to regularly evaluate and make adjustments as needed. It’s not about being restrictive, it’s about empowering you to have your money work for you the best way it can.

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