What's the most important thing you need to know about creating a budget?
Make your budget flexible. Some people make their budget too rigid and find it difficult to follow. Adding some wiggle room in your budget will make it easier to follow and make it easier to include savings in your budget and other financial goals, i.e. retirement planning, 529 plan, etc.
What are 3 tips for getting your budget back on track?
1. Write down the 3 reasons why you did not stick to your budget. Examining the reasons why you didn't stick to your budget will help you to resolve those issues and make it easier to begin using a budget.
2. Create a daily or weekly budget, get a receipt for everything you spend money on and log your receipts in your budget. You can use pen or paper or a software tool such as Quicken or Microsoft Money. You can keep all of your receipts in a shoebox, a plastic bag, and an envelope or desk drawer. This will help you to see quickly where your money is being spent and if you are spending too much money in one particular area, i.e. clothing, eating out, etc.
3. Use automatic paycheck deduction or free online bill payment to pay your bills. Using online bill payment helps you keep an accurate record of your spending. It can also help you to buy more needs (necessary items – food, non-designer clothing, shelter) instead of wants. It makes it easier to stick to a budget by using online bill payment or paycheck deduction because it you can't see the money it makes it less tempting to spend it.
What is one reason people don't stick to their budget?
A common reason people do not stick to their budgets is many people create a budget or spending plan but after a few weeks or a few months stop following it because you have to first admit that you need to change your spending habits. Having a budget requires discipline and provides accountability.
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