Most people dread the word “budget.” It sounds an awful lot like “diet” – and about as much fun. Maybe you’ve even tried making a budget in the past and failed. Budgets often fail for these reasons:
1. They contain unrealistically low expense categories. You pare down your expense categories until everything fits. Unfortunately, you don’t know what it really costs to live, so you fail the first week when you can’t get by on that amount.
2. They are missing some expenses categories. If you don’t get a bill for an expense, or if it doesn’t come every month, it’s easy to forget entire expense categories.
3. They don’t allow for the unexpected. Unless you can foretell the future, you don’t know what repairs, baby showers, traffic tickets, or medical expenses are coming. You need some money set aside for the unforeseen.
4. They’re inflexible. If you want to spend more on art supplies this month and save on the grocery budget by eating beans, why not?
5. They’re too much work. Some people write down every expenditure at the end of each day in a ledger book, and meticulously track every penny. However, most of us would be lucky to make it a day or two on that plan. A budget must be maintainable with a reasonable amount of effort.
To create a budget, add up what you’re spending now and how much income you can expect. Then, decide how much you want to spend in each category.
Once you have a budget, you need to find a way to make it work for you. Your budget shouldn’t control your every move, and it’s not realistic to expect that you will consult it every time you open your wallet. At first, you will want to add up receipts regularly and see how you’re doing. Eventually, you’ll find yourself saying, “we ate out last weekend, so this weekend let’s have friends over for homemade pizza.”
A good budget doesn’t stop you from spending any money. A budget is a plan. It keeps you from feeling guilty about spending every dollar and it puts you in control of your priorities. You can look at your budget and decide that you’d rather spend $50 a month on books than on coffee, or that spending a third less on clothes for a year would pay for a memorable vacation. A realistic, flexible budget is far less likely to fail, because it helps you make better choices with your money and reach your goals.