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Budget CuttingThe most common word associated with creating a household budget is ugh. Two emotions accompany that word…stress and dread. It doesn’t have to be that way if you fully understand the process and, naturally, no one does in the beginning. In general, people approach their budget in one of two ways. The first way is the easiest; no budget at all, just living paycheck to paycheck, hoping everything turns out fine. The other is to think you need every app, go through every step, and have a budget so complex that a government accountant couldn’t keep track of it. Budgeting needs to be simple, so here are some tips that may help take the stress out of your budget.

Tracking

Tracking where all of your money goes can be the most tedious and laborious part of your budget, especially in the beginning. At the same time it is the most necessary step in the budgeting process. I am from the old school. I didn’t even have a smartphone until the first week of May (2013) and I only got it then because it was free with an upgrade. So, I use pencil and paper to track my spending and write out my budget. That is tedious, I agree. There are plenty of free tools available for you smartphone that make expense tracking simple and much less time consuming.

Goals

We all have changing goals for our life, the same is needed in budgeting. Start with a clear, achievable goal, write it down, and put that piece of paper somewhere you can see it from time to time. Your first goal should be easy and quick to achieve. Start with putting $50 into savings over the first eight weeks. When you divide $50 by eight, you come up with the clear goal of depositing $6.25 each week. Add that amount as a weekly payment in your budget. Once you have your $50 socked away, move on to the next goal.

Simplicity Rules

I have seen budget advice that espouses a large number of categories. Sort of ”a place for everything, everything in its place” mentality. I was exhausted by the time I read all of the advice, let alone trying to follow it. Work on keeping things simple. Use your goals as a starting point, include all of your recurring expenses, and an amount to cover expected cash layout(new tires, car repairs, etc).

Budget Length

In the beginning, creating a yearly, or even monthly budget can be overwhelming. Especially when life blows a hole in the thing during the first month. Currently, I operate on a monthly budget, but it took me a few years to get to that point. Start out taking each week at a time if need be. Budgeting is like any other skill you have acquired over the years. It takes practice and patience.

Do Not Get Discouraged

Some time during the first or second week of tracking your expenses you will feel like chucking the whole thing. That urge will come back more frequently that you might think. I still hits me from time to time and I have been budgeting for several years. It is more intense in the beginning, though. Every time it hits, take a look at the goal you have written down, then walk away from your budget or tracking sheet for an hour or so. The feeling will fade.

Do Not Neglect You

Early on you will think that budgeting means sacrifice. That belief that self-sacrifice is necessary is the very reason that 90 percent of budgets fail. Even Scrooge broke down and spent some money. All you need to do is control your splurges. Treat yourself on occasion, but budget for those sprees. It doesn’t matter what you treat is, just add it to the budget like it is an expense. Keep in mind, sprees should never go on a credit card or occur more often than you put money into savings.

Realism

Budgeting usually means finding ways to cut back on spending. Prior to having children, I had a routine of drinking and carousing with friends a few nights a week. My first budgeting attempts occurred at that time. My first notion for saving money was that I would stop going out and save plenty. Of course, I just went over budget because it was not realistic to go from a few nights of carousing each week to doing none. In hindsight, I may have been successful then if I had simply budgeted for a single night out each week and cutback to that.

Many people set themselves up for failure when they first start budgeting. Complexity and a lack of understanding can make the whole process daunting and aggravating. Simplicity is key, so look at your current or past budgets with that in mind.

 

About the author: Jerry Coffey

 

Jerry Coffey spent many years in a debt-riddled gray area somewhere between broke and desperately broke. His seemingly endless need for more and more cash led him to payday loans, repossessions, bankruptcy, and depression. After years of the same financial style, he heard a piece of advice that inspired him to find a way to change. The advice: ''The very definition of a fool is someone who continues to do the same things, but expects different results.'' This led him to a much more frugal lifestyle that sees all of his bills paid on time and a growing savings account. Even the seed of a retirement account has begun to sprout.

 

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