#1 Start Simple – If you have never created a budget then that is an important first step. The value of sampling tracking your expenses and making purposeful decisions as to where you want your paycheck to go is a critical first step in having a successful budget. Don’t overthink it and make it more difficult than it has to be.
#2 Make savings automatic – You are probably reading this blog because you have an interest in starting to save some money, in trying to save more money, or trying to make some money available to give to others. If any of these is an important goal for you then make it a priority. Spending through your paycheck and then seeing what’s left over for saving or giving will likely result in no savings or giving. Flip this around! Setup a direct deposit into your savings account and/or to your church or charity so that when you get your paycheck you have already met these goals.
#3 Have a Purpose – Know why you have a budget. Are you trying to set aside 3 months of expenses to weather a potential job loss? Are you trying to buy a car? Are you trying to save for a down payment on a house? Are you trying to pay-off your student loans or credit cards? Reminding yourself of your purpose is helpful when you face a hurdle in the budget.
#4 Realistic Small Steps Instead of Impossible Leaps – Make success possible. Do not set unrealistic goals that will result in failure. Small steps in the right direction will keep you going on the journey. An unrealistic leap will stop you in your tracks.
#5 Don’t Forget the Fun – Often times hearing the word “budget” gives us the same emotional response as hearing the word “diet.” Intellectually we know that both are good for us, but we automatically link them to less desirable words like “pain” and “sacrifice.” When creating your budget don’t exclude the things that bring you joy.
#6 Stick with what Works for You – There are various budgeting methods that can be used. You can pay everything possible with cash, use envelopes for each category of spending, use sophisticated tools and software. All of these methods can help someone be successful. Pick a method and see how it goes. Once you find something that works for you…stick with it!
#7 Accountability Partner – Share your goals and milestones with a close friend or family member. Having someone else aware of your goals and budget and encouraging you along the way is very helpful.
#8 Celebrate – A successful budget is a process over time. Its important to have milestones along the way that can be celebrated. Let’s say the purpose for creating your budget is to become “debt free.” Then set milestones for paying off your credit cards, then your car loan, then getting your mortgage down to a certain level, etc. Becoming debt free might be a decade long goal, but by meeting several milestones along the way you will be encouraged to keep going onto the next one.