The first strategy\u00a0to create a successful budget\u00a0is to determine w<\/strong><\/span>hy<\/strong> you are doing a budget. Setting goals will give you motivation to stay focused and on budget:\u00a0something \u201creal\u201d to look forward to or achieve.<\/span><\/p>\r\n Try to set both short-term and long-term goals.<\/span><\/p>\r\n\r\n If you find the thought of making a budget too dreary to contemplate, start with your dreams, instead.\u00a0<\/span>Sit down with a pen and paper and list out all your hopes for what you want to do in your life. Consider how the stress of financing these dreams will affect you in the short-term and long-term.\u00a0<\/span>Be understanding of yourself, but also be realistic by asking, \u201cWill you be able to do the things you listed at the rate you are going?\u201d<\/span><\/p>\r\n\r\n Making categories helps\u00a0make the budgeting process easier and quicker. Create a category for each of the areas you\u00a0spend money or save money by grouping like items.\u00a0<\/span>Tracking fewer\u00a0categories makes it easier to budget overall.<\/span><\/p>\r\n Make a list of all the things you spend money<\/em> on<\/em> and save money for<\/em>. Once you have your list try to group items together.<\/span><\/p>\r\n Potential categories might include:<\/p>\r\n\r\n Getting a budget up and running often works well for a month or two, and then encounters mysterious problems. Spending may balance out well initially, but then grow harder to predict or control.<\/p>\r\n A key secret: budgets need attention and adjustment every month<\/strong>.<\/p>\r\n You'll\u00a0have the same expenses every month, but they won't always be for the same amounts. Therefore, your categories of spending will stay the same, but you'll make adjustments to the <\/span>amount<\/i><\/span>\u00a0you budget every month.\u00a0<\/span><\/p>\r\n For example,\u00a0if your significant other's birthday is coming up, you'll need to consider what you're planning to do or buy for that event, and how that affects other spending for the month.<\/span><\/p>\r\nEach month, consider:\r\n If a category of your budget needs to <\/span>increase <\/b>its spending,<\/b><\/span> then another area will\u00a0need to\u00a0<\/span>decrease <\/b>its budget for that month.<\/span><\/p>\r\n\r\n Another challenging\u00a0area for\u00a0budgeting concerns things you know you'll have to pay for, but infrequently or not on a set schedule. Such items include:\u00a0<\/span><\/p>\r\n\r\n You don\u2019t want April\u00a0to roll around and suddenly have to come up with a big amount of money to pay your taxes.<\/span><\/p>\r\n To prepare ahead of time, start\u00a0setting money aside every month in a\u00a0savings account. This will become a new category for your spending. You can divide\u00a0things like insurance premiums into monthly chunks and sock that away ahead of time, in order to have enough for the lump payment when it comes due. Add an additional amount for less-predictable spending. That\u00a0way, if you encounter a\u00a0big sale at your favorite store, then you can\u00a0stock up and not wreak havoc on your\u00a0budget. It will take\u00a0several months to get a cushion, so take that into account now.<\/span><\/p>\r\n It doesn\u2019t matter what precise system you use. You just need to have a plan for these expenses.<\/span><\/p>\r\n\r\n The hardest part of budgeting for most people is unexpected expenses<\/i>.\u00a0These may be unexpected, and sometimes unpleasant, but you can<\/strong> still plan for them.<\/span><\/p>\r\n Types of unexpected expenses include<\/span><\/p>\r\n\r\n If you have a car, plan to have it repaired. The unknowns\u00a0are\u00a0when that will be and how much it will cost. To prepare, s<\/span>et money aside ahead of time. Y<\/span>ou may think, \u201cEasier said than done!\u201d \u00a0But putting aside as much as possible (and as realistic) will\u00a0reduce your debt as well as lower your stress level!<\/span><\/p>\r\nTwo ways you can set money aside:<\/span>\r\n The best way to figure how much to budget for unexpected expenses\u00a0is to\u00a0list\u00a0all the unplanned expenses you had last year, plus ones you can predict are coming soon. For example, you might\u00a0predict that if you have a dog, he will have to visit the\u00a0veterinarian at least 2 times a year for unexpected reasons.<\/span><\/p>\r\n\r\n It\u00a0might take you a while\u00a0to get enough money set aside. Keep working at this, and don't give up if you don't always meet this target each month.<\/span><\/p>\r\n\r\n Even though you may be persuaded by the downsides of budgeting and think, “It’s not for me!”\u00a0don’t give up until you’ve tried it. Tracking one’s income and spending is a good exercise for anyone, and if you follow the basic process, below, it’s easier than you think.<\/p>\n The first strategy\u00a0to create a successful budget\u00a0is to determine w<\/strong><\/span>hy<\/strong> you are doing a budget. Setting goals will give you motivation to stay focused and on budget:\u00a0something \u201creal\u201d to look forward to or achieve.<\/span><\/p>\n Try to set both short-term and long-term goals.<\/span><\/p>\n If you find the thought of making a budget too dreary to contemplate, start with your dreams, instead.\u00a0<\/span>Sit down with a pen and paper and list out all your hopes for what you want to do in your life. Consider how the stress of financing these dreams will affect you in the short-term and long-term.\u00a0<\/span>Be understanding of yourself, but also be realistic by asking, \u201cWill you be able to do the things you listed at the rate you are going?\u201d<\/span><\/p>\n Making categories helps\u00a0make the budgeting process easier and quicker. Create a category for each of the areas you\u00a0spend money or save money by grouping like items.\u00a0<\/span>Tracking fewer\u00a0categories makes it easier to budget overall.<\/span><\/p>\n Make a list of all the things you spend money<\/em> on<\/em> and save money for<\/em>. Once you have your list try to group items together.<\/span><\/p>\n Potential categories might include:<\/p>\n Getting a budget up and running often works well for a month or two, and then encounters mysterious problems. Spending may balance out well initially, but then grow harder to predict or control.<\/p>\n A key secret: budgets need attention and adjustment every month<\/strong>.<\/p>\n You’ll\u00a0have the same expenses every month, but they won’t always be for the same amounts. Therefore, your categories of spending will stay the same, but you’ll make adjustments to the <\/span>amount<\/i><\/span>\u00a0you budget every month.\u00a0<\/span><\/p>\n For example,\u00a0if your significant other’s birthday is coming up, you’ll need to consider what you’re planning to do or buy for that event, and how that affects other spending for the month.<\/span><\/p>\n Each month, consider:<\/p>\n If a category of your budget needs to <\/span>increase <\/b>its spending,<\/b><\/span> then another area will\u00a0need to\u00a0<\/span>decrease <\/b>its budget for that month.<\/span><\/p>\n Another challenging\u00a0area for\u00a0budgeting concerns things you know you’ll have to pay for, but infrequently or not on a set schedule. Such items include:\u00a0<\/span><\/p>\n You don\u2019t want April\u00a0to roll around and suddenly have to come up with a big amount of money to pay your taxes.<\/span><\/p>\n To prepare ahead of time, start\u00a0setting money aside every month in a\u00a0savings account. This will become a new category for your spending. You can divide\u00a0things like insurance premiums into monthly chunks and sock that away ahead of time, in order to have enough for the lump payment when it comes due. Add an additional amount for less-predictable spending. That\u00a0way, if you encounter a\u00a0big sale at your favorite store, then you can\u00a0stock up and not wreak havoc on your\u00a0budget. It will take\u00a0several months to get a cushion, so take that into account now.<\/span><\/p>\n It doesn\u2019t matter what precise system you use. You just need to have a plan for these expenses.<\/span><\/p>\n The hardest part of budgeting for most people is unexpected expenses<\/i>.\u00a0These may be unexpected, and sometimes unpleasant, but you can<\/strong> still plan for them.<\/span><\/p>\n Types of unexpected expenses include<\/span><\/p>\n If you have a car, plan to have it repaired. The unknowns\u00a0are\u00a0when that will be and how much it will cost. To prepare, s<\/span>et money aside ahead of time. Y<\/span>ou may think, \u201cEasier said than done!\u201d \u00a0But putting aside as much as possible (and as realistic) will\u00a0reduce your debt as well as lower your stress level!<\/span><\/p>\n Two ways you can set money aside:<\/span><\/p>\n Note \u2013 This is <\/span>separate\u00a0<\/b><\/span>from your emergency fund. Most financial experts recommend that you have 3-6 months’ worth of income in savings for emergencies.\u00a0<\/span>Unexpected\u00a0expenses are not emergencies<\/strong>. Emergency funds should be untouched and on-hand for dire situations like losing a long-term job or encountering a major medical issue.\u00a0<\/span><\/p>\n The best way to figure how much to budget for unexpected expenses\u00a0is to\u00a0list\u00a0all the unplanned expenses you had last year, plus ones you can predict are coming soon. For example, you might\u00a0predict that if you have a dog, he will have to visit the\u00a0veterinarian at least 2 times a year for unexpected reasons.<\/span><\/p>\n It\u00a0might take you a while\u00a0to get enough money set aside. Keep working at this, and don’t give up if you don’t always meet this target each month.<\/span><\/p>\n Still not convinced that making and following a budget is doable? The following video describes a budgeting technique that’s very easy\u00a0and straightforward to follow: the “Envelope Budget.” Simply placing cash in labeled envelopes (one for each category or purpose)\u00a0each\u00a0month can be a very effective means of building healthy spending habits.<\/p>\n\r\n \t
Stage 2: Define Categories<\/h2>\r\n
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Stage 3: Schedule Adjustments<\/h2>\r\n
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Stage 4: Consider Expenses that Don't Happen Each Month<\/h2>\r\n
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Stage 5: Unexpected Expenses<\/h2>\r\n
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How much money should you set aside?<\/span><\/h3>\r\n
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The Envelope Method<\/h2>\r\nStill not convinced that making and following a budget is doable? The following video describes a budgeting technique that's very easy\u00a0and straightforward to follow: the \"Envelope Budget.\" Simply placing cash in labeled envelopes (one for each category or purpose)\u00a0each\u00a0month can be a very effective means of building healthy spending habits.\r\n\r\nhttps:\/\/youtu.be\/knfUHKzJ9m8","rendered":"
Stage 1: Determine Goals<\/h2>\n
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Stage 2: Define Categories<\/h2>\n
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Stage 3: Schedule Adjustments<\/h2>\n
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Stage 4: Consider Expenses that Don’t Happen Each Month<\/h2>\n
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Stage 5: Unexpected Expenses<\/h2>\n
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How much money should you set aside?<\/span><\/h3>\n
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The Envelope Method<\/h2>\n