Keys to a Successful Budget | Get Out Of Debt Options

Picture this, you have decided to set some sturdy financial goals; you have created a strict budget that allows for your rent and Mister Noodles. Then after a couple of days you come to the conclusion that you cannot live off of Mister Noodles alone; you start to miss things like meat and potatoes, the next thing you know you are sitting down to a steak dinner and ….wham…. your budget is broken. Sometimes people need to create a great budget in order to cover every aspect of their financial needs, no matter if they think they are doing all right with saving their money; there can be emergencies that pop up that they are not prepared for.

Using Your Goals to Set a Budget

Many people do not know where to start when they want to create a great budget; it is very simple, start with your goals and continue from there. Some examples of goals that could be used to create a great budget are the following:

Pay off mortgage
Pay off car loan
Pay off credit card debt
Save for emergencies
Pay off student loan
Save for a vacation
Save for my children’s education

When you want to create a great budget, you must first budget in your needs; then you can distribute the rest of your income to your wants and goals.

A Realistic Budget

Many people tend to spend more than they can afford too, others tend to save more then they should. They usually realize this when they are standing in line and they cannot get what they want because their transaction was not approved, or the dreaded overdraft on their bank account…yikes! For some people this happens a few times before they realize that they need to create a great budget, or any budget for that matter. Even those people who have a healthy income have to realize they are not the richest people on earth and should not spend their money as if they are.

Having a ‘Budge’ in Your Budget

Creating a super strict budget is a huge mistake that is commonly made by people. The determination to get to your financial goals is there, but creating a budget that is tighter than a pair of spanks is not ideal; nor will it allow you to have some fun, and who does not like a little fun in their life!

We all have times in our lives that we look at something and think ‘oh…… I want that so much.’ This is where the budge in budget comes in; if you plan a splurge, or save for something you really want then it will avoid the overspending and destruction of your plan.

Know the Areas That Are Problems

You need to know where all your money goes, and for some people they can pick out where their problem areas are. Places such as a used clothing store, the large supermarket that has everything but the kitchen sink, or bulk discount stores, could be considered problem areas because people tend to overspend in these places. Sometimes it can be the small amounts spent here and there that are problem areas too. There are people who go from store to store for the sales, and while spending more money on gas to get there it is not ideal for their budget in the long run. In order to create a great budget you need to determine what expenses are really needed or not, too many problem areas can bust your budget wide open and ruin your goal you have set for yourself.

Thinking beyond the Month

For most people their budget is done from a monthly basis, but they also need to remember their annual payments in their budget as well. Yearly memberships and insurance premiums are payments that often get forgotten until they are due. For some the holidays are the budget busters because they are not a part of the budget or saved for. In order to create a great budget you need to factor in all of these expenses as well as any other expense that is not monthly.

In The End

Budgeting is a constant learning experience, on one hand you do not want to be strict, but on the other hand you do not want to be spending all ‘willy-nilly’ either. You should always make sure that you have an emergency fund set up because just like the term ‘emergency’ suggests there are always unexpected things that pop up; like the tow you needed because your tire broke in the middle of nowhere. We all make mistakes that we have to learn from, financial mistakes are no exception, it is ok to get frustrated with your mistakes, just hang in there, and do give up you will make it work.

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.

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Some Tips on How to Create a Great Budget