How To Make A Budget And Stick To It

By: Christina Rardin

Break Studios Contributing Writer

Knowing how to make a budget and stick to it is a fact of life for most people, but it's not as hard as you might think. Financial planners make a living telling people how much they can afford, how much money to save for college, and how much to spend on everyday life. But you don't need a financial planner to create a monthly budget, you just need to know how much money you earn and decide how to spend it wisely.

Keeping track of your spending and making small changes are key to creating and maintaining a budget. You already know how much money you bring home each month, but where does it all go? Seeing all you spend on paper can be a real eye opener.

Record all your spending. For one whole month keep track of every penny you spend. The easiest way to do this is keep all your receipts and once a week, enter the totals into a budget worksheet. Budget worksheets can be found on several websites, or you can use budgeting software like Quickbooks.
Identify all your needs. You have bills that need to be paid (i.e. mortgage, food, utilities) and they take priority over all your other spending. Get out your stack of bills and plug them into your budget worksheet. Take a good look at your list and decide if you can make a few changes to lower some of these costs. An example would be your cable bill; dropping the premium channels would save you a few bucks every month.
Identify all your wants. A latte each morning and pizza every Friday are wants, you don't need to have them to survive. Be honest with yourself, did you need that new DVD?
Cut costs. Once you have decided what is a "want" and what is a "need", it's time to make some changes. Cutting out all of your "wants" is a little extreme, but cutting back on them is very doable. You could stop buying DVD's and sign up for a rental service instead, or only eat out once a week. Small changes like these can free up some of your cash.
Sticking with it. Creating a budget is fairly easy; sticking with it can be hard. Be realistic, don't lie to yourself. Before you buy an item, ask yourself, "Is this in my budget?" If the answer is "no" then don't buy it.
Plan for surprises. Things always come up; your car needs repairs or your kids need braces, so be prepared. Set up a savings account and make a weekly deposit so that when a surprise expense does crop up, it doesn't destroy your budget.