Balance My Budget: 5 Simple Steps to Great Money Management

Is your budget out of control?

A balanced budget is essential to great money management.  It puts you back in the driver seat giving you control of where your money goes and what it gets spent on. 

Wouldn’t it feel nice to be in control again?  It will certainly lower your stress and help you sleep better at night.

You can get there!  It really isn’t that hard or painful.  Chances are you’ve developed some bad money habits over the years and just need a simple plan to get you back on track.

5 Simple Steps to Balance My Budget

Here are five simple steps to help you get your budget under control in no time at all:

1.  Determine Your Exact Income

You need to know exactly what you have coming in to balance your budget.  It is generally best to manage your money on a monthly basis.  So, start making a list of the various sources of money that you have to determine your total monthly income.  For some, this might be a very short list because you only have one source of income and that is your paycheck.  For others, you might have several streams flowing in from things like freelancing, alimony, child support, dividend checks and business ventures.

Make sure you don’t miss any income source.  Once you’ve got a complete list written down, then sum it up to determine your exact income.  This is the size of the hammer you have to work with to balance your budget.

2.  Track Your Spending

Okay, so now you know exactly how much money you have coming in each month, but where is it all going?  You need to take a month to track every single penny you spend.  You must determine where all your money is going.  This is an eye-opening experience.  You will likely be surprised and shocked at how much is being spent on things that don’t seem all that important.  Tracking your spending is a little arduous and most people won’t do it, but that’s why they stay broke.

This is a big step toward putting yourself back in the driver seat with your money.  You’ll be gathering the information you need to make smarter decisions about where you spend what you make.  Don’t you work too hard for your income to simply let it slip through your fingers?

3.  Determine Your Priorities

After tracking your spending for a month, compare your outflow of money to your total income.  Are you spending more than you earn?  It is likely that you are.  This means that every month your are sinking deeper in debt and moving further away from a peaceful night’s sleep.  You need to make some decisions to balance your budget.  You have to set the right priorities for your spending.

What jumps out at you from your log of spending over the last month?  What amount seems totally out of control?  Resolve to cut way back in the areas that are unnecessary so you start spending less than you earn.  This might seem impossible at first, but with just a little sacrifice it can be done.  Take a look at this list of 20 ways to cut spending and these 50 ideas to legitimately increase your income for some inspiration that will help you balance your budget.

4.  Develop a Clear Budget Plan

You’ll want to adjust your money habits on a monthly basis to conform to your new priorities.  The best way to do this over the long-haul is to start a monthly budget.  A budget is a plan you create at the beginning of the month that tells your money exactly what you want it to do for you over the next 30 days.  It is a tool you can use to keep yourself on track.  If you are married, then you both need to agree on the budget before the month begins for it to be successful.

Living on a budget is not as scary as it seems.  In fact, it greatly simplifies your life and reduces your stress because it puts you back in control!  Don’t resist budgeting any longer.  Your budget will become your new best friend if you will let it.

5.  Make Adjustments

You have to remain flexible because a rigid budget will die a quick death.  Life is not always predictable and people are not always logical.  Your budget needs to take both of these facts into account.  You are going to make spending mistakes especially at first.  It takes time to incorporate radical change into you life.  Don’t make excuses for poor decisions, but don’t beat yourself up either.  Resolve to do better next time.  In a few months, if you stay flexible, you will have balanced your budget and you will be feeling much better about yourself.

Be willing to make the adjustments necessary to make your budget work.  It may not be perfect in your eyes, but a slightly compromised budget that everyone agrees to is way better than no budget at all.

Great Money Management Is Within Your Reach

What small step are you going to take today to start getting your budget under control?  Don’t delay another minute!  You don’t have to swallow the whole pill in one sitting, but taking one little baby step right this instant will empower you and give you the confidence you need to change your life.  You’ll thank yourself later!

Photo by penywise

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