Save Money Creating A Budget: My Version Pt 3
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This is part 3 in the series Save Money Creating A Budget: My Version. I wanted to try and explain the process of creating, implementing and maintaining a budget to save money. I pulled bits and pieces of my budget plan from all of the reading and learning I have done on the budgeting, and by my own preferences as I tried to create and implement my own budget.
We are on to step 3! By now we:
· Wrote down our income and expenses, creating the budget
· Decided what area we want to focus on saving first(save big to small)
Now we are on to actual implementation of our budget. It is not enough to simply write down our expenses and income, but we need to do something with these numbers in order to save money(where should I start saving money).
Then we need to pick an area to start implementing our budget. Notice I said start. We are not going to budget in every area of our lives right away(what is opportunity cost). We are going to start slow, make sure it works, and add more as we feel Happy with the money we are saving. If you start too drastic, you may burn out or quickly cheat on your budget, which defeats your ability to reach your goals.
For the sake of example, I will use eating out as the area I am going to start budgeting. From creating my budget, I estimated that my wife and I spend $125 a month on eating out.
I know I can decrease my spending. But again, do not start so drastic. You can adjust your budget to make the change achievable and comfortable. For this first attempt, I will budget our eating out budget from $125 to $100. Doesn’t seem like much, but if I can meet my goal, I feel accomplished, and can increase my savings next month, or 6 months later when I do a quick audit of our finances.
Now I have my goal, how do I achieve it? There are many ideas:
· My personal favorite is the consistency of splitting the amount into 4 parts for the 4 weeks. That gives my wife and I $25 a week to spend. Once it is gone, it is gone!
· Take your budgeted amount and carry it around as cash. It is physical, and again, once you do not have any more in your pocket, going out is simply not an option for the week or month.
· Keep your receipts. Each week total the amount so you know where you stand.
· Plan! Make plans days in advance that you are going to go out to eat. Picture where you will go and what you will get. That gives you something to look forward to and eliminates last second decisions to suddenly eat out. Make it a rule that if it is not planned a few days in advance you do not go out to eat.
· Accountability. Tell someone what you are doing. Have a good friend or family member ask about your goal to see where you are.
· Get a prepaid debit card(what is the credit card float). Put your budgeted amount on it at the beginning of the month, and that is your eating out fund. if you do not have funds, trust me, you will not be able to buy anything at the restaurant.
Try different ways if one is not working for you, or create a way that helps you reach your goal each month. remember this is not temporary, this is a lifestyle change, so find a way that will become a part of your life.
Once you find a way that works to stick to and accomplish your budget. Once you consistently hit your goal, ask yourself if you can increase your savings, if you want to. Once you reach your goal and you know that is where you want to stay at, it is time to move on to the next area.
There is nothing saying you cannot implement your budget in multiple areas, just do not over do it, so you do not quit before you see results. by setting small goals, you will be able to accomplish them along the way.
Remember to constantly fine tune and update your budget. My example above is specific to cutting costs.
Part 4 will be on changing or eliminating habits to increase savings and hit your budget goals.
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