The Boodle Blog
Top ten features of a successful budget
At the beginning of this year we posted a Blog on ways to manage your debts and improve your financial position.
A lot of spending had been done from the long festive season. We are in the mid month Boodlers and we want to know if you all followed the tips we gave you.
Budgeting was one of our top tips on managing your debt. Have you ever attempted to budget and given up in frustration or discouragement? If you can figure out the reason your budgeting attempt failed, you'll be able to institute a rewarding, successful budget and stick to it.
Think about it. What really determines whether budgeting works for you?
In all the budget bloopers and blunders we’ve seen, the same few problems keep rearing their ugly heads. To avoid them, here are the Top ten most important features of a successful budget.
- Categories that fit your personal situation and your spending habits, not somebody else's.
- Accurate income projections.
- Enough categories to give you a meaningful picture of where your money goes and where you might be able to cut costs, but not so much detail that tracking is a chore that you'll soon tire of.
- Inclusion of expenses that don't occur on a monthly basis, such as auto maintenance, homeowners insurance, personal property taxes, service contracts, etc.
- Regular review of categories to determine if you need more or fewer, review of expenses, and brainstorming about ways to trim costs in each category.
- Cash expenditure tracking and recording. Cash spending is the biggest leak in most budgets. Cash disappears quickly and if you don't write down everything you spend it on, you'll have a distorted look at your spending.
- A line item for savings so you treat a contribution to your savings account just as you would a bill you owe.
- Realistic written goals. Budgeting isn't about tracking your costs, it's about setting financial goals (saving for a down payment on a house, buying a new car, getting out of debt, saving for retirement, putting your kids through college, traveling, etc.) and finding ways to meet them. Without goals, your budget is just a pair of handcuffs.
- Identification of spending patterns you may not have been aware of when you weren't tracking your spending.
- Most importantly, internal motivation and a positive attitude!
Have you managed your budget successfully? Share with us how you did it…