Great Tips On Budgeting Effectively

These days everyone is having to cut corners here or there and tighten their belts to deal with an economy that is still precarious. Everyone is facing higher prices at the pump and in the grocery store and lower wages (not to mention job losses) at work, so apart from a small and lucky few, everyone is having to learn to budget more effectively. Budgeting could well mean the difference between keeping afloat and going under when things get really tough and it is also a good way of learning good financial management generally. This article will examine a few effective ways of budgeting and tips for sticking to the budgets you do set:

(1) No More Credit Cards

Credit cards are the mortal enemy of any budget. They are responsible for the vast majority of people’s debts and are the quickest route to losing control of your finances. It is too easy at the end of a meal or in a clothing store to get a rush of blood to the head and go a little crazy with the credit card. This must be avoided at all costs, and the best thing to do is tear up all credit cards except one before you start budgeting. Then put your one remaining credit card in a safe place at home somewhere for emergencies and never take it out with you.

(2) Stick to Cash

After you have got rid of all your credit cards, the next most important step you can take to really stick to a budget is only spend cash when you go out at night or when you go to the store. If you budget a certain amount for going out and a certain amount for groceries each week then the most effective way of sticking to that budget is only take that amount with you. That way you don’t allow yourself to spend over budget just because you see some treats you fancy or because you want to stay out a little later.

(3) Steer Clear of Brand Names

This is a great way of saving money when shopping. If you normally buy the most popular brands in the belief that they are of the best quality, you might want to try a few months of buying the store’s own brand goods. If the store is good quality then the chances are there will be very little difference between the own brand and the main brand except for the price. That difference in price, when spread over a number of products can make quite a difference to your monthly budget and is well worth doing.

(4) Set a Realistic Budget for Yourself

budgetingIf you are unrealistic about how much you can cut down your outgoings then you are setting yourself up to fail. If you need to spend a lot of money on travel for your business then clearly you wont be able to cut back on your travel expense. If you love going out a lot then don’t expect to be able to stop going out completely. Instead, plan to simply go out one or two nights less every month or to make changes somewhere else in your life. If you love buying clothes then simply buy clothes from a slightly less expensive brand or shop for a while.

(5) Get Everyone Involved

Any budget will fail if the people around you don’t help you stick to it. Tell friends and family you are having to draw your horns in for a while and that you can’t go out as much, or eat out as much. If you live with someone get them to help you budget on the weekly shop or cut back on whatever it is you are trying to cut back on. If they are still flush with money ask them to respect that you wont have as much for a while. And if you have a large family then get them all to help with the budgeting, particularly when it comes to their part of the weekly shopping list.

Esther is a consumer financial journalist and legal blogger living in Chicago. She blogs about all areas of personal finance and law that affect the consumer from tax savings to credit and store cards to where to find decent legal advice. She also contributes to a legal blog. See here for details.

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