Why does the word “budget” have such a negative connotation in our society? Often it seems that when people hear that word, they instantly feel either guilty or mutinous. The truth is that budgeting can be one of the smartest ways to save money and be healthier financially. It’s basically all about knowing where you spend your money and making decisions about how you can spend it more effectively.
In fact, my family survives financially mainly because of our careful budgeting. Being a young married couple is financially challenging. We are both in college and working as freelancers, and we live in Orange County, California, an incredibly expensive part of the world. However, by following a budget we are able to make ends meet and stay solidly on our feet, even managing to save for retirement and emergencies. Our budget has shown us how much money we really have and has helped us to spend less and save more.
The greatest tool that we use to manage our budget is time. Keeping track of expenses and income requires setting aside dedicated time on a regular basis. I have found that it is incredibly important to stay on top of things and not let your spending go unchecked for more than a week or so. That way, you can spot problems in your budget before they become too serious.
I use several resources to manage our money. First and foremost is our bank’s online banking service. It allows us to easily and instantly check our bank account for errors, make sure that all of our spending is accounted for by receipts, and ensure that we have enough money in our account for upcoming expenses. Almost all banks offer online banking and many also include tools for budgeting and saving. I suggest that you look into these services with your bank if you haven’t already.
The second resource that we rely on is Mint – a free online money management program. Mint syncs up with our bank accounts and keeps track of spending. It allows us to create recurring budgets in categories from gas to groceries to rent. It also offers many useful features such as rollover budgets, alerts, and one-time expenses. We use Mint to plan our monthly income versus spending, check how well we are sticking to our budgets, and keep track of every dollar that we spend. You can check the website out for yourself at www.mint.com.
For me and my husband, budgeting is all about distinguishing between what we need and what we want. We need a place to live, electricity, groceries, and gasoline. We want to watch television, go out to eat, and go see movies. When it comes to budgeting, we have learned to start by accounting for things we must purchase and then adding on things that we wish to purchase afterwards if possible. As a result, we never struggle to pay our bills but we do sometimes have to make sacrifices. Then again, that is just part of life!
Making sacrifices is not always easy though. By far the most difficult and most important key to budgeting is discipline. It is a challenge to deny yourself that movie with your friends or a trip to your favorite restaurant. For my family, the one thing that helps us most is remembering what we are sacrificing for. We do not go out to eat often because we would rather live in our own apartment than live with our parents. We motivate ourselves by keeping that in mind.
Another way that we stay disciplined is by allowing ourselves some “fun-spending.” For example, we budget $40 per month to spend on entertainment. To be able to afford that, we decided to buy store brand products whenever possible and give up organic dairy. In other words, we gave up some of our preferences in exchange for entertainment. This switch has allowed us to splurge on a movie at least once a month. That, in turn, helps us to feel less “deprived” and stay disciplined.