5(ish) Tips For A Successful Budget
1. First, Count What You Normally Spend
Making a budget doesn’t have to start with you figuring out how much money you should spend on food, drugs, alcohol, and clothing. I have seen plenty of attempts at budgeting fail because the person making it wasn’t realistic about where his/her money was going to go.
Before you even start planning a budget, I would recommend taking a few weeks or a month and just counting up every dollar you spend. It is pretty surprising to most people how much of their money they spend on things like sodas and snacks from the vending machine, or going out for happy hour. $1.50 for a soda may not seem like much at the time, but a few of these items each day you could be spending almost a hundred dollars per month on expensive junk food!
Take the time to log everything you buy from gas to subscriptions to hygiene products. Extrapolate those numbers and see how much you’re spending annually. Decide if they’re things you can live without and how much you should try to limit yourself. Keep in mind, if you try to suppress all of your desires, your budget will likely fail. So, don’t be afraid to treat yourself every so often – but understand that that money is going to have to come from somewhere else; make sure it’s not your savings. 
2. Be Honest With Yourself About Every Purchase
It’s extremely easy to say you’re only going to spend $600 on food each month and only count the money you spend at the grocery store and completely ignore the $5 every so often that is spent on gas station snacks or the energy drink from the machine. That money adds up and you’re not helping yourself when you’re spending more than you know you should be. It requires discipline to do this!
3. Change The Way You Think Of Purchases
This is something that I do all the time. Think about how much money you make each hour that you’re working. If you are paid a salary then you may have to do a little math. Whenever you make a purchase, take a second to recognize how many hours of work you will have to put in to pay for it.
For example, making $15/hr, a $90 per month internet plan requires that I work 6 hours to pay off that one bill (really, 7 hours after taxes!). On top of that I also have to pay my phone bill requiring another few hours of work and my mortgage which requires entire days to pay off. So when I am deciding to go out for dinner and drinks with a date that runs $60, really I am saying that I am comfortable spending over 4 hours’ worth (50% of my 8 hour work-day) of my pay on one meal.
4. Don’t Concern Yourself With The Physical Budget
If your biggest hurdle to sticking to a budget is that you can’t get the format right on your Excel sheet, you’re missing the point. Stick to the basics and just keep a running tally of categorized expenses if you have to. Just jotting down EVERYTHING you spend makes you at least get a feeling of how you spend your money. This one may seem silly, but it is still where many people get discouraged and stop trying to manage their money.
Your table doesn’t have to be complex and cover every eventuality and make pretty graphs. It could be two simple columns of descriptions and amounts. You can categorize things later if you had to.
If you really want to get into the details and want your accounts to be automatically downloaded and your purchases to be categorized for you, get a budgeting program. They’re relatively inexpensive and take a little time to set up initially, but after that it should be pretty automatic. Dan and I use Quicken and it’s been working pretty well for both of us. Mint.com is a good resource to take a look at all of your money, but is not a great predictor of future spending like Quicken can be; you also are giving a lot of information to a website; that’s on you to decide if you’re comfortable with that level of transparency.
4(a). Keep It Simple
Some ways to keep it simple are to just tally up daily, then weekly, and monthly totals in a notebook. Another way is to type everything into a spreadsheet type program like MS Excel. If you have troubles with discipline, then take out your month’s budget in cash (this method is OK once you have a pretty good idea of the minimum and maximum spending you can do) and separate it into envelopes labeled for specific purposes like: groceries, gas, grooming, clothing, etc. Once the money is out for the month, you’ll have to wait until the next.
5. Figure Out Needs vs. Wants and Pare Down Accordingly
Needs: stable (not fancy!) housing, basic clothing, food, and medicine as required, funding long-term savings and emergency savings.
Wants: pretty much anything else.
Cut down from the wants and / or choose more economically prudent needs: buy clothing on sale – or better yet – not from brand name outfitters; generic medicines; foods that are in season or are frozen or canned. Take the difference and use it to fund long term and emergency savings.
