How To Make A Budget
While everyone has a budget, some people have better
budgets than others. We came up with 10 solid tips for how to make a budget.
What does a bank, a sock, a cookie jar, an envelope, a mattress and one of those
little purple velvet liquor bags have in common? If you said, "places where
folks keep their dough," then you are right on the money.
MAKE REALISTIC GOALS
Goals can be as short-term as buying a new pair of shoes
next week, or as long-term as going on vacation next spring. But without them,
you have nothing to reinforce your efforts. Start small and be realistic about
what you want to accomplish. Make your goals personal. Decide what you want, not
what someone wants for you."
INVOLVE YOUR ENTIRE FAMILY
If it's just you, great. But if you have a spouse and/or
children, sit down together as a family and talk about your finances. Create a
budget together, and explain to everyone that they may be asked to make
sacrifices. "If you're not open and honest with the rest of the family," she
says, "you run a risk of them sabotaging your budget by not adhering to it."
BUDGET WITH FUN IN MIND
A budge that leaves no money for an occasional dinner at
a nice restaurant or for a family outing at an amusement park is designed to
fail. You have to pay yourself first. Your budget should help you, not put you
in a bind.
SAVE, SAVE, SAVE
If you're not having luck saving the traditional way,
change your mindset. Most people look at saving as putting away money for a
rainy day. But a better way to look at it is putting away money for a trip to
Hawaii. And if a rainy day comes before you save enough for that trip, then
fine, spend what you need to spend and start saving again for your Hawaiian
vacation. It's a lot easier to look forward to a positive goal.
TAKE A PERSONAL INVENTORY
If you don't know where your money goes, how do you
expect to manage it? For a week, keep a record of how you spend your money. If
you buy a cup of coffee, write it down. Then go back and figure out ways to cut
your weekly expenses. Maybe buying regular coffee instead of the gourmet kind
will save you $10 a week. Sounds small, but over a year it will really add up.
SAVING WILL BE HABIT-FORMING
A wise man once said, "a bad habit is easy to make but
hard to live with. But a good habit is hard to make and easy to live with."
EXPECT MAJOR CHANGES
Look down the road, and get into the habit of thinking
ahead. If you know that your situation is going to change -- new baby, new
clothes for winter, a new job -- plan for it. If not, these things will catch up
with you and blow your budget.
GET RID OF YOUR HIGH-INTEREST DEBTS
Focus on identifying high interest-rate debt and work on
paying that debt off. Check with the credit union of your job; many have lower
percentage rate credit cards and loans. The best way to keep from spending too
much on credit cards is to be open-minded about what you're spending.
FIND A SYSTEM THAT REALLY WORKS FOR YOU
It could be the envelope system, a bank or a credit
union. If it works for you and your family, use it. Experts warn, however, that
it will be harder for you to save if you keep your money where it is always
available to you.
YOU H AVE TO LEARN TO WALK BEFORE YOU CAN RUN
Creating and sticking to a
budget that works won't be easy, but in the end it will help you make the most
of your hard-earned money. Then when you have it down try to help someone else
learn how to make a budget too.
Mortgage Glossary9
