How To Prepare A Budget That Works

One of the greatest challenges people face with their personal finances is preparing a budget that works.

They either put together a budget that does not work, or they can’t even find time to even prepare one.

Sound familiar? If so, read on to discover some tips to help ensure you are able to prepare a budget that actually works.

  1. Decide to decide  Until you decide that budgeting is crucial to taking your finances to the next level, you will always find a way to avoid this “unsavory” task.
  2. Establish a set time every month  When you put “budgeting” on your to-do list AND on your calendar, you create a “trip point” that ensures you don’t forget this important task.
  3. Be realistic  Don’t be ridiculous with your spending plan. If you say that you are not going to spend money on restaurants this month and only $7.25 on groceries, you are LYING TO YOURSELF. Establish a reasonable budget that includes giving, saving, investing, paying the bills, and some fun.
  4. Prepare the budget BEFORE the month ever begins  If you start spending your paycheck before you plan the budget, you will inevitably practice the ancient art of “making your money disappear.” Choose to prepare a budget about 3 to 7 days before your financial month begins.
  5. Work together  If you are married, work together on the spending plan. Chances are pretty high that one of you is a saver while the other is a spender. Use the word “balance” a lot as you approach your budget.
  6. Keep the end in mind  Remind yourself about the “why.” Why are you preparing a budget? What plans, hopes, and dreams will be more likely to happen as you become a better money manager?
  7. Plan ahead  There are several non-monthly expenses that you know are approaching you. Known Upcoming Non-Monthly Expenses (KUEs) like vacation, property taxes, car repairs, Christmas, special days (like anniversaries, weddings, baby showers, and birthdays) are approaching. Save for them monthly so that they do not derail your budget.

Employ these 7 tips, and your budget will begin to be the financial tool you need it to be: one that helps you fund your plans, hopes, and dreams.

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One Response to “How To Prepare A Budget That Works”

  1. Debra October 22, 2013 at 5:13 pm #

    Along with the issues addressed above, I’ve another reason why I struggle with how to make a budget that works: our monthly income is not known in advance because main income is straight commission that fluctuates wildly. I’ve thought of taking last years gross income and dividing by 12 but that amount is different each year also. Any tips?

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