Do You Have a Budget? Do You Stick With It?

Many of us have budgets. We make them, and then we sigh every month as we exceed them. Or we just make them, feel good about ourselves for doing our personal finance "duty" and then promptly ignore them. The key to sticking with a budget that you have made is creating a budget that you can live with in the first place.

In order to do this, it is important to take a month or two and track all of your spending. (Personal finance software can help with this.) You should also come up with a "wish list" of things that you wish you could do with your money. As you track your spending, write down everything. Even that 75 cent candy bar out of the breakroom machine. Then look at what you are spending your money on, and compare it to your wish list. Are some of your unnecessary and frivolous expenditures keeping you from accomplishing what's on your wish list? That is one of the most effective ways I have seen for getting people to stick with a budget. After seeing where the money is going and where it could be going, many people are ready to make a budget and stick with it.

Part of making your budget is the old concept of "paying yourself first." This way, instead of waiting until the end of the month to set aside money for the things you want/need, you do it first. Then you budget for other items around that amount. It will help you prioritize your spending, and help you make a budget that you can live with.

The Motley Fool offers a helpful budgeting calculator.


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