How To Create A Successful Budget

September 17, 2010

Creating a budget seems simple enough, but when put into practice most people suddenly realize it is incredibly difficult to make and stick with a budget if certain factors are not considered. When you create your budget it is important to realize that in order to be successful you have to provide as much detailed information as possible. Ultimately, the end result will be able to show where your money is coming from, how much is left and where it is all going to. Here is some advice on how to create a successful budget.

Successful budgets, no matter the size or purpose, all have a few common denominators: reality, goals, commitment, focus, and self-discipline.

  • Reality. Your budget needs to be tailored to fit your particular needs. Consider your income, debt, housing payments and utilities, insurance costs, food requirements, clothing requirements, transportation, activities for each family member, the ages of family members, and your particular financial goals.

    Do you need to budget semi-temporary expenses or long-term goals? Do you have plenty of income or are you barely getting by? Look at your own situation and seriously consider what money needs to go where to meet the needs and wishes of yourself and your family. Don’t forget unexpected and once-a-year expenses in your planning.

  • Goals. To create a successful budget you need goals. Having goals will help you decide where you want your money to go. Plan your goals at least monthly and yearly with some long-term goals thrown in. If it works for you, take your monthly goals and break them down into weekly and daily goals as well.

    For example, if you have a goal of reducing your environmental footprint, then perhaps a logical goal for you would be to reduce your electric bill through energy conservation and to save money towards installing eco-friendly appliances or solar panels.

  • Commitment. You could spend a month breaking down your budget to the tiniest detail and setting great goals, but if you aren’t committed to meeting those goals and maintaining your budget, then you will be wasting your time. Commitment is as important to keeping a budget as earning the supporting income is.
  • Focus. Once you have your budget and goals in place and you have committed yourself to achieving them, you will start thinking of them every time an expense comes up. Breaking the budget on a new, bigger high-definition television will not seem so attractive when you know that doing so will mean one day less on your next vacation. Focusing on your goals and your budget will keep you on the straight path towards a successful budget and achievement of your financial goals.
  • Self-Discipline. Similar to commitment in many ways, self-discipline is the factor that allows you to focus and stay committed to achieving your goals and sticking to a budget. It is the factor that keeps you from buying a snack in the checkout line when you are hungry but your grocery budget is already maxed out. Self-discipline keeps your housing budget at a level you know you can afford, no matter what the bank or realtor suggests you can afford. It is a vital trait to develop, not only to maintain a budget and meet goals, but for many other aspects of your life.
  • Working together, the factors of reality, goals, commitment, focus, and self-discipline will be just about all you need to create and stick with a budget. Regardless if your income is fifty thousand dollars a year or five hundred thousand, a fully functioning budget will help you have more, earn more, and live better.

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