5 Tips for Making a Budget Part of Your Financial Routine

Following a household budget is an important part of effectively managing your money and achieving your financial goals and it can be an important part of your recovery after bankruptcy. I don’t think I’m going out on a limb by saying that most people would agree with that statement. So why don’t more people do it? One big reason is that the process can seem very overwhelming for people who have not been budgeters in the past. My advice is to take a deep breath and focus on these five principles so that you can make budgeting part of your regular financial routine.

1. Make Time for Budgeting – Just like anything else that is important, you need to set aside a regular time to do your budget. With the fast paced lifestyle that most of us live, it’s easy to put things off until tomorrow. Don’t overthink this part. Set aside an hour twice a week. You can get a lot done in two hours. Pick a specific date and time. Mark it on the calendar. This should be a priority.

2. Stay Committed – Essentially, a budget is a plan on how you intend to spend your money according to your various needs and wants. This is not a one-time thing, it’s an ongoing process. The first part is tracking your spending from the past so that you can evaluate your patterns and make plans for the future. But it doesn’t stop there. You have to continually look back and compare your actually spending to the plan set out in the budget. If you are not reaching your financial goals, you have to ask yourself why. Was the budget unrealistic? Did emergency expenses sabotage the plan? This reassessment process allows you to tweak as you go along.

3. Expect the Unexpected – Some irregular expenses are truly emergencies and some are not. If you need extra money every fall when your kids go back to school, this is entirely predictable. You should build savings into your monthly budget to cushion the blow of this irregular expense. On a similar note, I like to put a family calendar in a prominent high traffic area. The idea is that everybody can write down future events (ie. weekly sports, music lessons, schools trips, birthdays, etc.) so that mom and dad can be planning in advance for extra expenses.

4. Pay Bills When You Get Paid – This point is all about cash flow. It’s one thing to look at your expenses on a monthly basis, but you have to consider when you get paid in the month to make sure you won’t be relying on credit to get to your next pay day. Furthermore, paying your bills when you get paid helps to ensure that you have a clear picture of what your life really costs.

5. Look to Large Expenses for Savings – The as yet unspoken part of my message is that you should be looking for ways to reduce unnecessary expenses. Obviously. Even though every bit helps, cutting out a $10 monthly expense is unlikely to have a huge impact on your financial fortunes. Look to some of your bigger ticket items. Unfortunately, you may have limited flexibility in getting out of obligations for things like a house or car. What else is there? Whether it’s groceries or eating out, food costs are a significant portion of any family’s budget. Take time to plan your meals over the coming week. Buy the necessary groceries in one trip to the store to avoid repeat trips and the temptation to spend on non-essential items. Buy planning, you are also less likely seek the convenience (and high cost) of eating out.