How to make a Budget and Stick to it
If you are in debt, have been in debt or want to avoid debt you know that knowing how to make a budget is essential to having a healthy financial life. Budgets only work if they are realistic and if they contain core elements of planning that looks to the past as well as the future while making sure the needs of the moment are met. It isn’t hard to create a budget for your life that works, but most people benefit from having a little outside help to avoid certain mistakes and get on the right track sooner.
The most common mistake made
The most common mistake that people make when they create a budget is they make a budget that is too restrictive and lacks flexibility. You can’t plan for everything so if your budget is micromanaged down to the last cent, one of two things will happen. Either you won’t stick to it because it will feel too much like you are being denied and make you feel too constrained, or if something unplanned happens you won’t have the resources to deal with it.
Create a budget that works
You need to sit down with someone and talk through what the needs are in your life on a weekly, monthly and yearly basis. If you just try to make a monthly budget you won’t be prepared for the immediate cost of living, or plan well for the annual ones. A good budget takes what is known as the “local and global” view of life. You don’t have to know where every dollar needs to go, but you do always have to have in mind the responsibilities that have to be taken care of. Knowing what needs to be paid each week, each month and each year will help you avoid impulse spending as well.
Create a budget for the future
Another common mistake is that people leave out the future when planning their budgets. This is understandable because the idea of having a budget usually becomes important when there is trouble in the present. All budgets, even the ones designed to help you consolidate your debt, should include planning for the future that will allow you to move forward. This doesn’t mean just setting aside money for a vacation, that is just a small part of the future, you want to make sure that your next car, your next house, your next class or certification in a skill to get a better job starts from a better place than before.
Ask someone to help you create a budget
One of the best people to get involved with your process to make a budget that works is a debt specialist. Even if you aren’t in unmanageable debt, they can spot where problems might occur and help you to plan for anything that could happen. A free consultation can give you a better idea of how a debt counselor can help you to build a budget that keeps you out of debt and building towards the future.