What does it take to make a successful budget? What are the innate and “magical” skills that allow a successful budget? No “magic” should be required, at all. All that is required for a successful budget is to learn a few good tips and tricks that can help to cut through the bad habits and make a budget work for YOU. Here are the Traits of a successful budget:
Make it a Priority
A budget is not something that can be done, “when you feel like it”. You need to keep track of everything and place a high importance on budgeting and sticking to your budget. A
List of Necessities
Necessities HAVE to be in a budget. If you leave out things you need, you will break following your budget. Make sure to include an ample allocation for food, utilities, payments and bills. These are must haves and need to be accounted for. The options of not meeting the payments monthly or struggling because you do not have the proper amount budgeted can make it hard to follow a budget and will eventually make it so that the system breaks down, without a doubt.
Update Debt list (watch debt go down)
Updating your debt list is one of the “fun” parts of a budget. Keeping track of how much you owe and watching those numbers decrease from you efforts at budgeting and savings is a really good feeling and can help to keep you on the track for budgeting and debt reduction.
Account for Expenses that Change
Variable expenses like gas and incidentals need to be accounted for. It is hard to say how much you spend on something like gas a month, but tracking it over time can give you a good idea. As an added benefit, keeping these lists can be a way to let you know about issues. If you suddenly see an abnormal increase in gas expenses for instance, it could be because your car needs maintenance.
Budget for Luxuries
Budgeting for luxuries is important. You should not live with no enjoyment. However if you are in tough financial straits going out to dinner every night is an expense that is far beyond luxury. Budgeting for a few books a month, 1-2 trip to the movies and/or 1-2 dinner ‘s out should be encouraged. If the budget is tight, keep luxuries low, but certainly include SOMEHTHING you enjoy at least one time a month.
Don’t forget yearly expenses
Not all expenses are daily and monthly. There may be some bills due quarterly or yearly (like taxes) do not leave yourself scrambling to ocme up with the extra cash right before these are due. Budget a 1/12 of the yearly bills each month and set it aside, so that it can be paid off when it is all due, with no effort.
When you are living close to the edge money-wise it is hard to set aside money for an emergency fund, but it is a wise idea to do so. Even if you can only put in $20 a month, at least over time you will have a little bit of a cushion to fall back on if times are rough. If possible, 5-10% of your earnings to an emergency fund/savings will give you enough of a cushion to weather any tough times.
Tools for success: (software, spreadsheets, bank checks, receipts)
Having the right tools can make all the difference for success. Keeping spreadsheets for all of your expenditures, bank checks and receipts as well as software to track it all are key traits for success of a successful budget.