'People tend to think about just the one side of the equation when working to keep their budget on track, but there's another side that you can influence too, whether it's for a temporary or permanent basis.'Ĩ. 'Take a part-time job or sell something that is just sitting in your closet taking up space,' Beck says. However, if reducing the amount of money going out isn't doing enough, look for ways to increase the money coming in. Following a budget typically means making cuts in less essential areas or eliminating some costs completely. Try adding on instead of only cutting back. 'If you think, for instance, that you spend 12 percent of the family income on discretionary items, and you find after tracking for two months it's more like 28 percent, then something is off there.'ħ. 'The things that pop up will actually let you know what the real norm is, so pay attention to what it is telling you,' Lovell says.

However, it's likely that you simply uncovered unknown problem areas. If over time, your budget results don't match your expectations or financial needs, you may assume the plan is wrong. If I hadn't told her that I was on a strict budget, I probably would have spent more. 'For example, even talking about it helped me when I was shopping with my mom. 'Talking to friends really helped me,' Wong says.

'Once you have that, it's a lot easier to maintain the budget if a big expense springs up.'īeing open with those around you about your budget can also help you create a support system while you work to get your finances on track. 'For example, allocate just as much to your savings as your emergency fund,' Wong says. It can help you finance unexpected expenses like medical bills so you don't have to pull income from other areas. An emergency fund should be an essential component of every budget. Build an emergency fund into your budget. 'It's better to be approximately right than precisely wrong.'ģ. 'You don't want things to slip away,' Lovell says. Budgeting month-to-month can accommodate everyday living expenses and bills, but a yearly budget can help you also plan for larger and more infrequent expenses, like income taxes or holiday presents. Stephen Lovell, a certified financial planner with Lovell Wealth Legacy in Walnut Creek, Calif., suggests budgeting for one year at a time. Establish your budget for a time period that's long enough for you to see results. The hardest part of a budget is sticking to it, so the easier you can make it, the better.'Ģ. 'If I have a problem area within my budget, like eating out or shopping, instead of trying to focus on everything and being too hard on myself, I pick that one area.

'There are things that you will likely sacrifice when budgeting, but it's very important to be realistic and understand your own habits,' says Kristin Wong, a contributor to the financial blog Get Rich Slowly. While a budget can be a great tool for managing finances, it can quickly become overwhelming if it's overly detailed or idealistic.

start thinking about as a way to concisely create a better environment for yourself using your resources, it will get that much easier,' says Leslie Beck, a certified financial planner at Compass Wealth Management LLC in Maplewood, N.J.Īside from maintaining a positive mindset, here are eight guidelines to help you successfully build and manage a budget:ġ. However, creating and maintaining a budget doesn't have to be a painful process. Just like dieting, budgeting is often associated with deprivation and cutting back.

8 steps to creating a personal budget