There are good budgets and there are great budgets, but the best budgets are those that work for you and which you can stick to on a long-term basis. It’s not just enough to spend time and effort creating one for your family, you must work towards staying on track and not spending more than you’ve set aside for the month. Many people lack the discipline and self control to spend within their means; however, with a little determination and lots of fear for the adverse consequences (debt and ultimate ruin), it’s easy enough to stick to your budget if you:
- Get the whole family involved: A budget is not just for some members of the family – no amount of penny-pinching is going to help if even one person goes on spending sprees. So before you set a budget, call a family meeting and work out specifics that are acceptable to everyone. Only when your entire family is at peace with the budget and amenable to following it can you make it work.
- Set reasonable goals: Sure it’s a budget, but that doesn’t mean you have to scrimp and save every possible penny. Unless you set reasonable goals, you’re going to be breaking the rules sooner than later. It’s like going on a diet – in order to stay on it, lose weight, and keep off the weight you’ve lost, you need to set goals that are achievable on a daily basis and sustainable in the long term. So when you prepare your budget, ensure that you set rules that are easy to obey and not too rigid on your family.
- Use cash and credit cards wisely: Actually, if you’re a sensible credit card user, it’s best to use your cards for most of your purchases because you’re not just using borrowed money at zero interest, you’re also deferring payment for a whole month or even more, in which time your money is earning interest. However, this strategy could backfire if you’re not the kind who pays off the entire balance amount on your cards every month. Also, when you use cards, you need to have a head for money so you keep track of all you’re spending that particular month even though the payments are going to be made only in the next month. So unless you can do all these things, it’s best to use cash as much as possible so you know how much you’re spending. Insist on receipts at every payment point however so it’s easy to keep track of what you’re spending on. If you prefer cards but have trouble remembering bill deadlines, set up automatic debit instructions with your bank to pay all outstanding bills in one go – this also prevents you from spending more than you have. Prepaid credit cards are also a good option when you’re not a responsible credit card user.
- Make periodic adjustments: A budget is not a document that is drawn up once, then framed and followed to the letter month after month, year after year. It must be modified according to your changing financial situation – if you earn more, you can allow yourself a little more leeway, and if you earn less, you must cut out unnecessary expenses and start to scrimp on costs. Also, some months may bring about special situations like birthdays and other occasions where you may have to spend more than you usually do. And unless you include these in your budget, you’re going to overshoot it. When you change your budget every few months taking into account your changing circumstances, it’s easier to keep up with it.
When you create a budget, pay attention to making it work for the first few months – if you can get through the initial stages, it becomes a habit that’s easier to maintain.
This guest post is contributed by Mark Macaluso, he writes on the topic of Masters in Accounting . He welcomes your comments at his email id: mark.macaluso985<@>gmail<.>com.
Does your family have a budget? How do you stick to it?