Tips for creating a solid budget plan in 2016

When most people hear the word “Budget,” they instantly think they have to give up most of the things they enjoy. Certainly, if you want to live by a very tight budget that puts as much as possible in savings, or pays down your debt in the shortest period of time; AND you have the willpower to stick to such a strict budget that forces you to live without any luxuries. But it is also very possible to create a budget that allows you to live within your means, save money and still enjoy the little luxuries in life we all want (just maybe not as much). Just like every person is different, you can customize your budget to fit your needs and still manage to save money and enjoy life.

A budget is nothing more than a plan on what you do with your income. Some people live very well without having a formal budget, others do better when they have something in writing they can refer to. It’s really easy to create a budget on your own if you have basic computer skills and know how to use a spreadsheet program. But if you do an internet search, you will find pages upon pages of free budget programs on the internet that will walk you through creating a budget. If you choose to use an internet program or purchase budgeting software, make sure that it allows you to “tweak” the numbers to fit your lifestyle as you want.

Almost every financial expert will tell you to always pay yourself first, meaning put something into savings, and this is a good policy to follow, even if that amount seems too small to amount to anything. A small savings account is still better than no saving account at all.

When you are ready to create your budget (let’s assume you are using a software or internet program for now), gather up your last tax return, your last few pay stubs, plus any records you have of any other income and expenses (like rent and utilities). Also try to make a list of miscellaneous expenses you make like buying lunch each day or coffee on the way to work, etc.

Now as you start the program it will begin to ask you questions. This is not something anyone is going to judge you on, and in order for it to work, you need to answer all those questions as honestly as possible. At the end, when you see where your money is going because you were truthful, you will have an idea of how to tweak the budget and what you spend to make it something you are able to live with. You will also see how some of the “little luxuries” you don’t think much about add up at the end of the year and start rethinking whether you need to spend money on them every day, or even at all. That cup of Starbucks each morning can add up to a hefty sum each year. So you might decide that you are only going to allow yourself one or two cups of Starbucks, or go out to lunch once or twice a week so you can accumulate more into your savings.

However you do it, remember, this is YOUR budget, no one else’s. It has to be something that not only meets your goals, but is something you can live with and stick to. If it is unrealistic, you will only feel guilty and disappointed when you can’t stick to it. On the other hand, if you start slow with small changes, when you are able to stick to it and see that you really aren’t missing out on things in life, you can adjust it as time goes on to be more or less strict.

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