You know that living within your means is the ticket to preventing excess debt and keeping your financial planning goals on target. But for many of us, knowing this fact is one thing and living it is another! If you aren’t exactly conscious of your budget, follow these ten steps to get your spending in line with your goals.

  1. The Basics. Gather your monthly bills, create a schedule for paying them, and make a plan for regular expenses like gas and groceries. Obviously, you want your income to exceed your expenses. If that’s not the case, you have some sacrifices to make.
  2. Pay yourself first. Remember that your retirement account contributions should come out of your paycheck first. Create your budget with what is left over.
  3. Be realistic. If you make deep cuts in your spending, you might not stick with your budget in the long run. For example, it’s reasonable to set a goal of shaving 10 or 20 percent off of your food costs. It’s probably not reasonable to slash it by 50 percent or more.
  4. Keep it simple. If you’ve chosen a budgeting app or strategy that feels too burdensome and complicated, you probably won’t stick with it. Identify easy, familiar options that aren’t overly difficult to learn and use.
  5. Identify areas for reduction. Everyone can trim a bit of fat from their budget – and sometimes a lot! Whether it’s canceling unused subscriptions or calling around for quotes on insurance, finding areas where you can save a bit of money can be the backbone of a sound budget.
  6. Only purchase items that fall within your budget. Ignore those marketing emails, and don’t even click that ad on Facebook, if you’re not shopping for that particular item this month. Avoiding temptation to overspend will keep your budget on track in the long run.
  7. But do budget for “extras”. Let’s be honest; no one can resist temptation all of the time. Go ahead and build some room for fun purchases into your budget. It’s easier to keep track of your impulse spending that way.
  8. Live below your means. Avoid the idea of maxing out your lifestyle potential. Live below your means, and unexpected hiccups in your finances won’t faze you.
  9. Save for emergencies. Now that your budgeting expertise has freed up extra income, devote some of that extra to a savings account. Now you’re ready to weather any storm that comes your way, without having to charge emergency purchases on a credit card.
  10. Review your budget regularly. Every few months, check your credit card statements against your budget plan to be sure you’re staying within bounds. It is easier to correct three months’ worth of mistakes than three years’ worth!

    And remember: We’re here to help with all of your financial planning needs. Give us a call and we’ll help you decide how to best plan for your future.