• Lower your monthly payments
  • Reduce stress and live your life
  • Avoid personal bankruptcy court

Three Keys to a Successful Budget

Most things that are considered worthwhile are anything but easy. Take making a budget, for example. Not only do you have to limit your spending but creating a budget that works for months or years is no easy task. That being said, discovering the keys to a successful budget is a venture that will benefit you enormously in today’s economy and save you from commonly encountered money problems out in the world for years to come.

Not sure where to start? These 3 time-proven elements are considered essential keys to a successful budget.

1. Choosing the Best Tool for the Job

It seems like every week a new program comes out that pledges to make it ridiculously easy to develop and maintain a budget. But how do you decide which one is right for you? Here are a few different options!

·         Cash-Only

Known as the ‘squirreling away’ method, a cash-only system leaves nothing to chance. People who employ this method want to be extra-sure that their money spent on their budget, rather than splurging on things unnecessarily. This method can be as simple as taking an envelope and depositing a set amount of money into it for bills and savings each paycheck or keeping a piggy bank. The downside? Your money won’t gain any interest and it’s easier to lose in the event of a burglary or home invasion.

·         Electronic

Many   people see using completely electronically automated services as the key to a successful budget. Debit cards specifically designated for using on your bills can be convenient, particularly if they’re set up to pay automatically each month. Several people also report that using spreadsheets and graphs is helpful for developing their budget, seeing which expenses they can cut down on, and is much more flexible and less hassle than using traditional record-keeping. The downside? Forgetting to back up your files safely can cause them to be lost. Also, depending on what financial information you have stored electronically, hackers and identity thieves have a chance of making off with your hard-earned dollars.

·         Traditional

All of us have probably seen our grandparents poring over old receipts and check stubs as they balanced their ledgers and got ready for a new year of financial planning. Although it takes considerably more effort than the previous ways mentioned, many people have found that the traditional way is still one of the best keys to a successful budget and your money maintenance. Ledgers and keeping constant records of your financial transactions can lead you to actively search for ways to save money, reveal your spending habits, and provide an accurate budget each and every month. The main downfall of using this tool for planning your budget is in the time spent having to double-check your figures and keeping an eye on unexpected or numerous expenses.

2. Realizing That Life Happens and Planning Ahead

Flexibility in your finances is one of the keys to a successful budget. Although you will always have fixed expenses, such as car payments, insurance, and rent, there are many variable expenses that can pop a hole in a budget very quickly. Put simply, life happens and so do problems. Whether you’re having unexpected car trouble, accidentally ruined your work clothes, or broke your leg and ended up in the emergency room, this is where expenses can really make or break budgets. Include a section into your budget each month as an emergency fund. Most experts agree that a minimum of $500 is a good cushion for emergencies although creating a financial nest egg equal to your expenses for six months is a smart and achievable goal. Even if nothing happens one month, resist the urge to ignore that part of your budget and add the money into your ‘rainy day’ fund. You’ll be glad you did.

3. Having Patience and Staying Motivated

Although this may seem odd to add as one of the keys to a successful budget, not having enough patience and getting discouraged with your finances is one of the main reasons that even carefully planned budgets can fail. Remember that a budget is a way to build wealth and ease your financial burdens over time, not overnight. If you owe money, this waiting game can be especially frustrating but the important thing to remember is that even if it’s just a little, you are slowly pulling yourself out of debt whereas by doing nothing you would only be sinking further into it.

So, if patience is the key to a successful budget, where does motivation come in? By keeping you excited about your budget! Track your project and celebrate with rewards for each milestone. Set short and long-term goals so that you have something to work towards or make your budget into a game where you can see how much you save each week.

Budgeting – The First Step towards Financial Independence

Have you ever thought or dreamed about how it would be like if for instance one day you wake up and you realize you are financially free? You are under no debt; you have a nice mount of savings for any type of emergency and you are building your retirement plan well? That would feel like being on top of the world. Like you have no worries left to tense yourself up to. Nothing is impossible in this world and there are ways to alter the impossibilities. If you want this dream to come true, then budgeting is the way to achieve it.

Why a budget

Why a budget is critical:

Why a budget is critical is a good question. Mainly because it helps you secure your future. But budget is a word that frightens most people and makes them believe it is a strick routine of cutting of every desirable thing from their monthly expenses. It’s really not like that and shouldn’t be thought negative of. Sticking to a budget is hard but once you do eventually it will lead you to a peaceful financial independence. A budget should be a part of every person’s life and should have a vital importance.

Every Little Penny:

The first thing you need to do is note down all of your expenses of a month coin to coin. This should involve everything whether it’s random that changes like every month or week or fixed costs like mortgage, car and bill payments.

Arrange your Expenses into Groups:

When you realize where you are spending your money divide it into different categories and groups like transportation , food , bills, clothes, medical, and of course savings. In this way you will know in which category you are spending most on and you can easily see from this where you are going too high.

Start Cutting down:

The next step for you is starting to chop down things from your list. Fixed things like bills can’t really be changed but you can try to some extent like starting to use public transport more often or ridesharing. Food expenses can be cut down by using special offers, sales and coupons. Reduce your entertainment expenses by eating out a bit lesser watching a fewer movies out and try to visit the club lesser. Cut down things from almost every category or group you have made. If you just start randomly without any planning it will just create a mess and you might start reducing wrong things. So be wise and have a thorough look first. By cutting down some things in life which we are using an excess of really help you a lot. In the start you might feel like cutting down has made you poorer but that’s not it. It’s for your own good your future.

Sticking to your budget:

Sticking to a budget and following it is not really a piece of cake. You must mean it and take it seriously in it order to stick to it. There are some things which you can follow that can make you follow your budget and also save you from the later pondering on why a budget was needed for us when we can’t go with it.

Here are some tips to stick to your budget:

  • Some families turn the whole budgeting thing into a game. They set up a goal for a week like using only $100 for their groceries, when they reach that goal they celebrate it as an achievement.
  • You can also give out some small prizes for family members that think of different ways and come up with the best suggestions for reducing costs and sticking to the made budget.
  • Reward yourself when you feel like you’re sticking to the budget. This doesn’t mean a heavy prize or something but a family night at the cinema or maybe a DVD together at home.
  • Keep your spirits and hopes up and try to be optimistic. You are not favoring anyone than yourself and your family.  This whole plan is for your future.

Dealing with Debt:

Debt might be thought of as a fixed expense but in real it isn’t. There are ways to save thousands of dollars by appropriate debt settlements. Once all of your unsecure debts are settled down you will get a payment plan which will be even less than the total of the monthly payments you have at present.

Financial Independence:

Now you know why a budget is important for you. Create one for yourself and see the difference in increase of your savings. Control your expenses, get out or reduce every debt you are under think before buying things whether you need them or not. Soon you’ll realize yourself that you were over spending and that the budget you made help you get independent financially.