How to Create a Budget that Sticks

A meticulous budget is to financial success what a well-designed blueprint is to the construction of a building – you cannot achieve the end result without it!?

Designing a personal budget that sticks, however,?can be very difficult, especially if it isn’t something you’ve done before.?There are a few nuances that?only make themselves apparent when you’ve been running a budget for some time (sometimes,?up to years).?Fortunately, you can bypass a few of these teething issues by following the comprehensive guide?that I have?provided in this post.?

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Why keep a budget??

When?you are?working toward financial goals, a budget acts as a rudder. It allows you to maintain a course of action, align (or realign) with goals, and track milestones.?

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1. Make a list.?

To start, you’ll need to?make a list of?all your monthly expenses. Try to be as comprehensive as possible.?

It helps if you pay all of your bills from one account (and can therefore work out all expenses from one account’s statements), however, cash earners, dual-income households, and others like this may encounter issues when trying to account for all expenses from one account. In this instance, it may be helpful to start with a list on pen and paper so that you can add and remove items in a flexible way. It may take a little while to account for everything, so keep your notepad with you over one or two days so that you can jot down everything that comes to mind when it does.?Writing out your expenses also?allows you to get a tangible grasp on?where your expenditure lies.?

Try to be as comprehensive as possible - include everything from the coffee you grab before work to the sweet treats you snack?on on?a Friday.?

Once you’ve completed your list of expenses, you should drop it into a spreadsheet, where you can start assigning values and formatting the rest of your budget.?

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1. Be realistic.?

When?you’re?assigning values to your income and expenses, it can be tempting to embellish a little. If you earn variable income, it can be tempting to use a higher aggregate figure as a placeholder than you know to be realistic. On the flip side?of the coin, it can be just as tempting to assign reduced values to expenses, such as groceries, than you know to be true.?

Misrepresenting actual figures in a budget in this way, unfortunately, does not change the reality – your income and expenses are what they are.

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1. In, out.?

If you’re excited to start your budget, you may be inclined to try and create an exceptionally complex budget, but if?it’s your first time?creating?a budget or your income and expenses fall into the “standard”?category,?and do not require complex tracking, then a simple budget will do the trick!?

Remember, a budget?is used?to track income in and expenses out. It’s really that simple.?Overcomplicating your budget?not only wastes time but can also?make it?difficult?to manage in the long term, and you do not want to burn out on this.?It’s in your interest to keep it simple!?

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1. Save according to your goals.?

One of the?key?functions of a budget is to allow you to gain a good enough understanding of your income and expenses?so that you can?create an accurate, sustainable savings plan.?

In some cases, you may have high disposable income – in instances like these, it is?important?to ascertain?what your goals are. You may find that, though you have “X” left over every month, you only require “Y” to meet your savings goals. You can invest this cash?elsewhere,?or?simply?put the excess into your savings account, but you can also use this cash for other activities. You shouldn’t be overly restrictive with yourself if you are successfully meeting goals.?

Conversely, you may not have the disposable income?you require?to save according to your goals. In cases like these, you?will have to?identify how you can get as close to your savings goals as?possible,?without failing to meet other financial obligations. With a savings goal in mind, as well as a flexible budget, it is easier to cut back on particular areas where you may find excess.?

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1. Ask for help.?

While?it can be intimidating to get?stuck into a budget, rest assured that others have been effectively managing budgets of their own for years.?These people can be friends, family, or colleagues. There is no harm in asking for help!?

Reach out to the people in your life and ask them to assist you in setting up your budget.?More experienced individuals will likely have dozens of tips and tricks that will save you time and effort, as well as?a little extra cash!??

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1. Celebrate every milestone.?

Some savings goals, most in fact, take time and effort to achieve. Because the road to meeting your goals can be long and strenuous, it’s?important?to stop and celebrate each milestone?that you?reach.?

These do not have to be exclusively financial. For example, you can celebrate maintaining and adhering to your budget for six months. Another example can be cutting back on (or completely ridding yourself of) bad habits, such as quitting smoking or cutting back on after-dinner snacking.?

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In conclusion?

Budgeting is a necessary part of?effective?personal finance. Understanding your financial environment allows you to plan, cut back, and save according to your goals.?

If you are working toward specific financial goals, you should create a comprehensive, flexible budget that allows you to proactively track your income and?expenses,?whilst?also allowing you to identify areas of improvement.?

Be sure to reach out to others for help?in?building?an effective?budget?and?ensure that you take the time to celebrate?both?big and small wins.?If you thought this article was insightful, be sure to leave a comment with your feedback!