Many people, above all those in financial stress, find a home budget more problematic to maintain than it is to actually create.
Creating the budget is ineffectual if all you do is file it away never again to see the light of day.
When working to eliminate credit card debt, however, both creating and maintaining a realistic budget is crucial to a successful outcome.
Below are a few tips for making your budget plan work for you and to help you find relief from your financial stress.
1.
Review your budget frequently.
The more often you do this, the better it will work.
Remember, your budget is not etched in stone, rather, it is a flexible document, one that must accommodate changing circumstances.
2.
Preparing your budget in pencil is a reminder that you must revisit it as your circumstances change.
Increased or decreased income, an increase in the cost of utilities, food, clothing and other necessities will have a considerable impact on your budget.
3.
If you are not meeting a spending goal, then review it and correct as needed.
One way to modify is to not set yourself too many goals.
Start small, and then work your way up to the much bigger goals as you get better at this.
4.
Do not use another person's template for your budget plan.
While it is okay to begin with a general acceptable outline for your budget, it is important to remember that your finances are unique to you.
5.
Always keep your financial goals in front of you (do not put them away in a drawer); they will motivate you to stick with your budget plan.
I recommend that you use sticky notes, write one goal on each note and stick them where you will see them often, the bathroom mirror and the refrigerator door are two good spots.
While first learning to budget effectively it is quite possible that you will backslide; if you do don't worry.
Explore the cause objectively and then re-start your budgeting again.
When your actions and your budget seem to be off track, and, believe me, that will happen, just sit down and make the necessary adjustments.
When NASA sent men to the moon, the planned course required constant, small course adjustments in order to reach the target.
Budgets are no different.
One way to protect your budget is to open three savings accounts, one for emergencies, one for annual or semi-annual expenses and one for yourself.
The emergency account is there to cover unexpected expenses from throwing you off course.
Three months of income is the minimum for this account although you build that balance over time.
As for the yearly savings account, all you need to do is add up everything you pay for once a year including birthdays, holidays, insurance premiums, taxes and any other yearly costs that you incur.
Then divide the total amount by 12, and each month deposit that amount into your savings.
The annual account spreads the cost of known annual expenses over 12 months in anticipation of the known single outlay of cash needed once a year.
The account for you is just that! It provides you with a source of money for a wide variety of possibilities.
You may want to use this account for retirement savings, for investing, for vacations, or for some other discretionary purchase.
Of course, this account should only be established when your debts are under control.
For people in financial stress because of unmanageable debt, the best way to find the money to relieve that stress is by reducing those obligations.
For people in financial stress, with large, unwieldy credit card debt, budgeting is an important first step in eliminating credit card debt altogether.
Budgeting during stressful times has the added benefit of becoming a habit, one that will keep you out of financial trouble in the future.