10 Steps to Creating a Budget You'll Actually Stick To
Image courtesy of eHow.com
We all wish we could save more, spend more wisely, and stick to our budgets--but with the average American hanging on to approximately $8,000 in credit card debt, budgeting is clearly not a priority for most of us. The problem is, saving and sticking to a budget is a lifestyle change, which is why saving money is about as easy as losing weight. But no worries--here are 10 great tips for budgeting and saving your money so that you can start making those changes easily and effectively.
1. Be Realistic:
Make sure your budget is realistic. Giving yourself close to no wiggle room will make following a budget more than miserable, and we all know the harsher the budget is, the less likely you are to stick to it.
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2. Recognize Past Habits:
Before making your budget, look at your statements for the month and figure out exactly what all of your money goes towards.
3. Determine Problem Areas:
After you categorize how much money you spend in each area, look at the areas that surprised you the most for where you can save. For example, if you didn't expect that you spent $500 last month on clothing, maybe that's the area you need to concentrate on most in your budget.
4. Make Small Adjustments to Reap Big Rewards:
Make a list of the top three areas where you can save and cut your spending by just 20 percent or less. For example, consider this: if you started shopping at wholesale outlets or farmer's markets, would you be able to lower your grocery bill each month?
5. Take Control of Mortgage Payments:
Is your mortgage a large chunk of your spending? Maybe you bought a house that was a bit over budget. With current mortgage rates at historically low levels, now is the time to refinance and lower your mortgage payment to get your finances under control.
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6. Learn to Cook:
Is one of your problem areas eating out? Change your lifestyle by buying a few cookbooks, or watching a few cooking shows such as Good Eats to help you learn to enjoy successful cooking at home. The amount of money you'll save in the end from eating in versus dining out is extraordinary.
7. Utilize Technology:
Is it hard for you to keep track of where your money is going? Try mint.com for great graphing technology that monitors your finances. Quizzle.com also offers great tools for keeping track of your home and financial spending and even gives you a free credit report.
8. Self Reflect:
If you don't like using web programs to budget, another way to cut spending quickly is to begin writing down every single thing you spend money on for a week straight. This reflective process helps you curb spending and think twice about each purchase.
9. Minimize Your Consumer Clutter:
Do you have a lot of clutter in your home? Oftentimes, buying habits develop from collecting objects that don't really add value to your life. Resist the urge to buy an extra dolphin figurine, and instead save that money for better uses.
10. It's More Than a Budget; It's a Lifestyle:
After creating your budget, the most important thing is to take active steps towards changing your lifestyle so that it's easier to follow. If you stop for coffee every morning, consider investing in a programmable coffee machine that brews great coffee or espresso in the morning. While you may have to spend more initially, finding ways to make that budget a long-term habit without sacrificing the things you enjoy is the key to lifetime savings.
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Creating a budget and sticking to it isn't easy. In fact, it can be downright difficult and frustrating. But with a little discipline and planning, you can use these steps to lower your spending and keep track of your finances. You'll be happy you did in the long run!
Jenny Zhang is a personal finance writer for Quicken Loans Mortgage News where she specializes in writing about the housing market, home improvements, and money saving tips. In her free time, she loves to cook, travel, and shop.
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