Tips for Successful Budgeting

Budgets can be tricky. They seem so simple. All you have to do is subtract your spending from your income and have money left over. Then you set spending goals and stick with them. Easy? Not for most people.

The majority of budgets fail for the same reasons. With a few tips, you can start your budget off on the right foot.

Tip #1: Look to your spending

The vast majority of consumers cannot simply use a preset budget and succeed. We all have different necessities and wants. While gasoline may be a large expense for my family due to commute times, it may not be a consideration for someone who takes the subway to work. One family eats differently than another.

The key is to look at what you are currently spending and find ways to change it. Look to cutting back as much as possible where you can. Don't just go by the "20% of your income" rule. The key is to keep cutting until you can't anymore. If you are financially sound, you just need to maintain where you are.

Tip #2: Be accurate

When you are listing your income and expenses, it is essential that you are accurate. Don't round up or down. In fact, I suggest that you go right down to the penny.

When it comes to your spending, you should track it carefully for at least two months in order to see where you are spending your money. If you leave out the fact that you get a latte every morning on the way to work, you will not have an accurate picture of where your money is going. That is why you can follow your budget, yet not have any money left over at the end of the month.