Having a good budget can help you become more intentional with your money. Instead of your money ruling you, budgeting allows you to tell your money where to go.
But just because budgeting is a positive thing doesn’t make it easy.
Here are three important budgeting basics you shouldn’t ignore.
Tracking Your Expenses
Tracking expenses isn’t fun. I’ll be the first to admit. What it IS, though, is revealing.
Until you have an honest look at where your money is going it’s hard to make the right changes. Whether you have a program like Personal Capital or Mint track your expenses or whether you do it yourself you need to track all of your expenses for at least one month.
Tracking your expenses can be a real eye opener. Don’t skip this step.
Being Realistic
When you first start budgeting it’s tempting to want to cut your expenses back to practically nothing. This, however, is not realistic.
When you try to do too much at one time the changes you want to make won’t stick. Think of it like dieting. When you start a new diet you do really well for a few days and then all of a sudden you find yourself sitting on the couch with a pack of Oreos and a bag of Doritos. The changes you tried to make were too much at once and now you’ve done more damage to yourself than good.
Budgeting is the same way.
You need to look at budgeting as a permanent lifestyle change.
Forgetting About the Small Items
In the last point I referred to being realistic as not wanting to go from spending four thousand per month to spending five hundred per month. On the same note you have to be realistic about the small items too.
Don’t forget to budget for the small items your normally buy. You may think you don’t need to account for the $5 per day you spend on coffee or the $25 per week you spend on pizza……but you do.
To have a budget that works you need to be open and honest about you and your family’s needs and to account for everything that’s going to come up.
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I think tracking your expenses is the most important of all when it comes to budgeting. What’s the old saying, you cannot manage what you do not measure or something along those lines :-) Measuring exactly what we spend each month has helped our household to cut our spending by 25% plus!