Do you need to hang on to more of your money?
Budgeting is a great way to make your money work harder and go farther for you. That is if you design it correctly.
A lot of people approach budgets in completely the wrong way. This usually leads to frustration and failure.
A well-designed budget allows you to direct your money to your priorities without being inflexible. This is extremely important because real life isn’t always predictable.
If you really want to get results out of your money, then I have some budgeting techniques you’ll want to use.
Budgeting Strategies that Really Work
A practical, workable budget must begin with the right money-management principles at its foundation. I’ve been successfully running my personal finance budget for several years now. Over this time, I’ve learned what works and what doesn’t.
Here are the best ways to budget for real results:
1. Make It Cash-Based
In a nutshell, a cash-based budgeting system is one in which you take your total monthly income and divide it into categories. Each category receives its own envelope to hold the cash. The amount in each envelope is what you have to spend in that category until the next budget cycle begins. The envelope budgeting system is tried and true. It has been around forever. The system helps you use your money as intended and avoids overspending. There is something psychologically powerful about spending actual cash as opposed to using a card to make purchases.
2. Adjust It Monthly (or as necessary)
If there is one thing I know for certain about this topic, it is that rigid budgets die a quick death. As I said earlier, your budget must be flexible to survive. You want to evaluate and adjust the amount you allocate to each spending category regularly. Some categories might not change, but others will need to be adjusted up or down to meet current expenses. For example, I often have to adjust the amount I plan to pay for electricity monthly because my usage varies.
3. Agree on the Allocations
This is especially important if you are married. Both of you need to agree on the envelopes you create and how much is assigned to each envelope. This is absolutely critical if you want your budget to work. If one spouse feels slighted or isn’t 100 percent onboard, then they won’t be able to live with the budget long-term. A less than perfect budget that keeps going is worth a hundred times more than one that your spouse can’t live with.
4. Get a Tool to Make it Easy
Manual budgeting is too time-consuming and cumbersome. There are several good tools available to make your budget easy to manage. I only spend about a half an hour twice a month taking care of my finances. I researched high and low and finally selected a fantastic envelope budgeting software package that I couldn’t live without. I’d highly recommend that you do the same. The easier you make it for yourself, the more consistent you’ll be in executing your budget.
5. Keep the Big Picture in Mind
Last, but not least, it is imperative that you have a clear, big picture purpose for living on a budget. Otherwise, you will give it up at the first obstacle. For me and my wife, we really saw the benefits of being debt-free and decided that’s the direction that fit us best financially. We’ve never looked back. Our budget was the tool that gave us the freedom we enjoy today. I’d never live without one. Having this kind of mindset and clear purpose will help your budget endure.
Get It Right and Your Budget Will Rule
If you use these principles, you will be well on your way to financial and budgeting success. You can learn even greater detail on these strategies and specific steps for implementing a budget in The Super-Charged Guide to Financial Freedom. If you have any questions or other thoughts about budgeting, then please address them in the comments section below.
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