10 Secrets To Creating A Successful Budget

Let’s be honest, the word budget is not one of our favorite words and so for many people. People dread budgeting that’s why most of them find themselves in financial woos after losing their jobs or retirement. The only way to reach your financial goal is by developing a plan for saving and spending.

Securing your financial future for the time you won’t be able to work is important, it saves you from a lot of stress and here’s how you do it.

1. Make a list of your expenses
Start by deciding which things are important first, it makes cutting back on other things that are less important not seem as sacrifice. Include all costs that you incur during the course of a year like housing, food, entertainment, transport, debts, education and insurance.

2. Pay with cash
Having a lot of credit cards and debit cards makes it easier to overspend. The only exception should be mortgage and car loan, everything else like groceries, clothes and vacations should be paid in cash to stay disciplined.

3. Start slowly
It’s easier to find yourself “cheating” on your budget in the beginning, allow yourself a bit of a slush fund for those unexpected purchases but be always on the lookout not to spend more than that fun fund you’ve set aside. Use cash only.

4. Don’t spend more than you earn
You might think how is this possible but a lot of people actually do spend way more than they earn. That’s why people file for bankruptcy. It doesn’t matter if you earn $10million, if your expenses exceeds what you get you will always find yourself in debt. So after you write up your expenses, compare them to your take home money not your gross salary, if your bills exceeds your net earnings, revise your spending giving priority to necessities.

5. Include a saving category in your budget
Not including a savings category on your budget is the biggest financial failure. If the worst thing happens and you lose your job, you need to at least not change your lifestyle for six months while looking for another job. This is only possible if you have savings.

6. Emergency budget
Emergency budget sounds silly but it’s very helpful. There are those expenses that just pop up like having a flat tyre or a funeral in the family. You need to have money on the side just waiting for that because these things happen. Without it if anything comes up you will be forced to take out your credit card or take money from another category to cover it.

7. Schedule your goal
We all know a goal is a dream with a deadline or else it remains forever someday. If you want a new car, go on vacation even retirement you need to prioritize it. Open a sub-account and put whatever you can every month no matter how little. At the end of the year you will have money set aside for that particular goal that wouldn’t have been there.

8. Track your spending
The only way you can balance your budget is to know where your money is going. If you don’t write down how you spend your money chances are you’ll miss a couple of bucks here and there and every cent affects your budget. It’s not about punishing yourself but being smarter with your spending.

9. Be flexible
Being flexible means you also need to know how to shift some money from category to category. So if you really want to join that dancing class you might want to cut back that lunch out you have once a week. It’s about putting things into perspective.

10. Celebrate your progress
Changing means growth but it’s also hard but eventually gets easier to follow and becomes part of our lives. You will realize how relieved and feel a sense of empowerment and control over your money and end up having fun with it.