Using a Budget to Reduce Your Expenses and Reach Your Goals

Written by , May 30, 2011

Using a Budget to Reduce Your Expenses and Reach Your GoalsWhen it comes to excitement, making a budget is right up there with flossing your teeth. But if you want to make the most out of your money, a budget is the best place to start. If you have no idea where your money is going each month, you won’t have much chance of building up the savings you need or even keeping all of your bills up to date. A budget will help you control your spending and meet your financial goals.

While it’s not necessarily much fun, creating a budget is relatively easy. You just need to take an honest look at your income and expenditures, and do a little math to see what’s left.

Here is some advice that will help you get your finances where you want them to be.

  • Start out by establishing goals. Do you want to save up for retirement, set aside money for your kids’ college education, or get together enough money for a great family vacation? Do some research and find out how much you’ll need to save and how much time you’ll have. This will give you the incentive to make a workable budget and stick with it.
  • Be realistic. When creating a budget, many people make the mistake of glossing over certain expenses that they feel are unnecessary. But the truth is that you need to have a little fun. Budget a certain amount of money each month for entertainment, and perhaps even for eating out. Partaking in such activities, even if it’s not as often as you’re accustomed to, will help make sticking to your budget less painful.
  • Cut out the truly unnecessary stuff. Why pay a few bucks for a glorified cup of coffee every day when you can make almost the same thing at home? And does that greasy fast food that you eat for lunch really taste better than something you could bring from home? Well, maybe, but what you bring from home is probably a lot healthier and cheaper.
  • Make room for as much savings as possible. Savings are important for so many reasons. You’ll need an emergency fund to protect you from job loss or unforeseen expenses if you haven’t built one up already. You’ll need a retirement account, and an account to put toward college for the kids. And if you have all that taken care of, it can never hurt to save some more. Is there really such a thing as too much savings?
  • Budgeting is something that we should all be doing, but relatively few of us actually do it. A complete and realistic budget lets us see exactly where our money is going and make changes if necessary. If done correctly, a budget can help us meet both long- and short-term goals.

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