Conquer the Budget Beast with Planning and Rewards

You’ve decided that you need a budget, but where do you start? It may seem overwhelming, but with a bit of planning, you can achieve your financial goals. Whether your goal is to be debt free, build up your emergency savings or save for the future, the first step in having extra money to put toward your goals is taking control of what you spend on a daily basis.

Review Your Expenses and Income

To get a good picture of how much you – and your entire family – bring in and spend, you’ll want at least four to six weeks’ worth of information.

  • Collect everyone’s paystubs and track cash payments, from jobs like babysitting or mowing lawns, to get a complete picture of your family’s income.
  • Review past bank statements for credit and debit card purchases and receipts for cash purchases to see how much your family spends and on what.
  • If you don’t feel like you have enough information from the past month, begin tracking spending and income today and plan to create a budget next month.

Next, compare your total income and expenses. If your expenses are higher than your income or if you don’t have enough left over to save comfortably, you’ll want to make a budget.

Cut Back on Spending

Expenses that are not necessary are known as discretionary spending and are generally the easiest to change. In contrast, expenses like rent, car payments or tuition may be less flexible. Can you take public transportation, share rides or make multiple stops in one trip? Can you cut back on cable, internet or cell phone plans?
For discretionary spending, many people use the envelope method. They take out a set amount of cash each month and split it into envelopes. The envelopes can either reflect money for each person in your family or for types of expenses – dinning out, entertainment, new clothes. When the money in the envelope is gone, you can’t spend any more until next month.

Stay on Track

It can be very tempting to veer off track, so it’s important that your entire family supports your end goal. Some families select one money manager to track expenses, pay bills and dole out spending money, while others prefer not to burden one person with that work. Decide what makes the most sense for your family, and communicate openly so everyone knows what they need to do and how close you are to achieving your goal.
Rewards can also keep your family motivated and on track, but think of ones that cost little or no money. Schedule a family game night or movie night, where everyone spends quality time together. Go to a special community event together. Make a favorite meal.
With a plan in place, you can alleviate the stress of living paycheck to paycheck and begin achieving your financial goals.