Chapter 1: How to Make a Budget and Stick to It
Chapter 2: Creating Personal Budget Goals
Chapter 3: Assessing Your Current Financial Situation
Chapter 4: Identifying Budget Focus Areas
Chapter 5: Staying Committed to Your Budget
Chapter 6: Budget Software
Commitment is key to success in any task you set out to do, and the same holds true for your budget. This is the only way to derive benefits from your budget and ensure your future financial security. While achievable milestones do help succeed with your budget, some other factors also influence how well you follow your budget.
Involving Your Family
Family involvement is very important both during the creation of your budget and at periodic reviews. Including everybody’s views and perspectives while drawing up the budget ensures their participation and continued loyalty to the plan. Be flexible within reasonable limits when creating the budget so that the needs of all family members are met equally and fairly.
Maintaining a monthly record of income and expenses makes it easy to track finances for budgeting purposes. Allocating funds for each expense head lets you have a specific upper limit within which you have to curtail your expenses in that category.
Base your allocation on the average expense for that expense-head for three preceding months. If this is an area where you want to reduce spending, allocate as much as you would ideally like to limit the monthly expense to.
Track the progress throughout the month for high expense areas. This lets you cut back in time when you seem likely to overshoot the allocation. In some cases, you may have to revise the target budget upwards. Review and discuss such cases with the family before you take these decisions.
Monthly Allocation for Annual Payments
Distribute payments that you need to make on an annual basis over the year so that you work towards it every month. Put aside the monthly portion in a special fund or account, if possible. Any interest earned on this account can go into your savings or leisure fund or pay off an expense like mortgage payments faster.
Review and Reassess
Review your progress periodically. Assess improvements and failings and tweak your spending accordingly. Reviewing helps you stay focused on the goal and also lets you correct imbalances quickly.