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There's no question that creating a budget can be hard and frustrating. And staying on that budget can be even harder and more frustrating. But once you have a budget it's critical that you stay on it. Having and staying on a budget can mean fewer financial problems and much less stress. If you're married then having a budget can even help your marriage. One of the biggest bones of contention between couples is money and when you have a budget to manage it this reduces a lot of the financial stress and the arguing that often accompanies it. So what can you do to stay on your budget?
1. Use cash for discretionary spending
Once a week take out the cash from your bank or an ATM that you need for that week to cover your discretionary expenses or those things that you could live without. You will probably find it easier to not buy those great shoes on sale for just $50 if it will take the majority of that week's cash.
2. Cut out your bad habits
Stop and think for a minute about your bad habit. Is it smoking or alcohol? These are habits that can be very expensive. If you cut out a bad habit then you will have that money to put towards your other expenses. You should see your bills go down and your health get better. Down the road, you'll also save on health care expenses and might even qualify for cheaper insurance premiums.
3. Share the obligation
One thing you don't want to be for sure is the only person in your family that’s worrying about the budget and saving money. There's no way you can win the battle if your partner is spending you into debt. The two of you need to make a plan as to how much spending money each of you will have. Sit down once a week and do a reality check to see how you're doing. When the budget is everyone’s responsibility then everyone has a stake in things. This will ultimately make a big difference. It's just not fair that one person has to shoulder the entire burden by him or herself.
4. Pay down your debts
Credit card debts especially can bog down your entire financial situation. If you don't pay off your balances each month, the money will be added to next month's balance as well as the additional interest. When one month's interest rate is rolled into the next it's "capitalized" and this means you end up paying interest on the interest. There are two ways to get debts under control. One is to put all of your efforts against paying off the debt with the highest interest rate, as this will save you the most money. Then go to work on paying off the debt with the second highest interest rate and so on.
The other way to get your debts under control is called the snowball method. This is where you concentrate first on paying off the debt with the lowest balance. You should be able to do this fairly quickly and will then have more money available to start paying off the debt with the second lowest balance, etc. In either case if you have other debts you must remember to continue making at least the minimum payments on them.
5. Keep all your receipts
Regardless of how you determined your spending you now have a budget and it can be very tempting to stop keeping up with every little expense. But if you do keep your receipts this can really help you stay on your budget. You should also write down the places where you spent money but didn't get a receipt. You should find it more difficult to overspend when you can see how much money has actually gone through your hands.
6. Keep your checkbook balanced
If you don't balance your checkbook regularly it's important you start doing so. This is especially true if you're on a tight budget. This is because just a few small mistakes could end up in overdraft charges or insufficient funds in your checking account. If every time you get a statement from your bank you balance your account, this can help you make sure you stay on your budget and in the black.
7. Continue to analyze your spending
Reducing your spending should be an ongoing process. Try to sit down at least once a month with your budget and your receipts. See if there are expenses you could cut. Do you go out for lunch every day? Maybe you could take your lunch to work a couple of days a week. If you have a fairly long drive to work you might be able to set up ridesharing with a co-worker or even take public transportation. Every cent you save by cutting gas costs and the cost of eating out will be money you will have available to save or for big purchases.
8. Stay the course
Life is full of unpredictable happenings. Your budget should include something for them as well as variable expenses. And be flexible. Don't beat yourself up if you go over your budget occasionally. If you make a mistake or two, it can be frustrating and a bit difficult to get back on track. But it's important that you do so because the longer you can stay on your budget the bigger the rewards you will earn in the years to come. The important thing to keep in mind is that budgeting is worth the effort and that staying on a budget will help your life run more smoothly, as your finances affect so many things.