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Succeeding with a Budget

In my last update we talked about creating a budget for the first time.

After the first month or two, it is time to up your budget game a little bit. Here are some tips for being successful with your budget on an ongoing basis.

1. Update it. It is very easy to get lazy and use the same budget numbers month after month. The problem is each month is different. Income may change; your priorities may change, and your activities are almost certainly different. Are there any kid’s activities? Birthdays or other gifts? Planned outings? Dr. Appointments? We all know that utilities vary based on the season.

2. Balance It. Most people know that it is a bad idea to plan to spend more than they bring in. However, it is also bad to have money “left over”. You walk around all month thinking “I have $500 extra this month”. Every time you are presented with an opportunity to spend money, you spend it. A much better approach is to give every dollar a job. Every dollar is either going to living expenses, debt reduction, or savings. We call this a zero-based budget, because there is nothing left over.

3. Review It: Review it in detail at the beginning of the month. If you are married – you should both review it, and agree it is “The Plan”. It is important that everyone that is involved in the success or failure of the budget agrees it is as complete as it can be. It is a great habit to look at the budget 5 minutes or less daily. You can use that time to categorize transactions and monitor spending.

4. Live It: “If it isn’t in the budget, Don’t spend it!” This would be great if the plan was always perfect. The plan isn’t perfect, and life happens. So how do we keep on track? The answer is that you have to revisit the plan whenever there is something that may make you go over. Unplanned kids activity? Revisit the budget and ask yourself where you can take the money to cover. Do that BEFORE you spend the money. After you spend the money, it may be too late. If there is nothing in the budget you would be willing to reduce to cover the new expense, then perhaps the new expense isn’t going to happen this month.

Stick with these tips consistently, and soon you will have more money available for getting rid of your debt, or saving for that big goal.


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