6 Secrets to Easy Budgets

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A friend once told me she didn’t budget because it was “just setting yourself up to fail.”

At first I was adamant: “No way! Having a budget is the only way not to fail!” But then I started to think about it. I had made more budgets than I could count and a lot of them had failed.

Mostly it worked out like this: Bitten by the get-organized bug, I’d run out and buy new notepads, pens and a calculator, assuming office supplies would naturally make me a better budgeter. The first day I’d make a budget with about 30 different categories to track all my spending, even down to hand soap.

The next week I’d save all my receipts, and add them to one of my 30 categories at night. I would also check my bank accounts online daily. So by Week 2 I’d grow tired of being hyper-vigilant, feel stressed out by my complex budget, and chuck the whole thing in the trash.

So maybe she wasn’t entirely wrong. Budgets do set you up to fail, but only if you set them up to fail. Eventually I learned the easy way to budget for myself.

Here are a few secrets to make a budget work for you:

1. Start with a goal

Not having a clear goal was a big part of why my budgets failed. At first, my only foreseeable goal was “manage money.” I’d create a budget for every category of spending and then add in a random dollar amount for saving. Those aren’t clear, actionable goals.

Before you create a budget, decide what you really want. Maybe it’s building a $25,000 emergency account, or going on a $5,000 vacation next year, or putting $40,000 down on a new house.

Whatever you want, figure out exactly how much you’ll need to save each week or month to get there and make that your goal. Then use your budget to keep your spending in check and you’ll actually reach your goal.

2. Make your budget simple

I mentioned my 30 different categories — twice, in fact — for a reason: Budgets can (and should) be simple. When you’re doing something as important as managing your money, a complex system of budgeting and tracking seems like the way to go, but it isn’t. If you spend the first hour of your day checking accounts, tracking spending and adjusting spreadsheet columns, you’ll quickly get tired of it.

Your budget can be as simple as you want. Want to limit yourself to three categories, such as “household,” “debt” and “savings”? Go for it.

3. Track automatically

Much of what I’ve read about budgeting says to track your expenses with a pen and paper. Come on now, it’s 2013. You should track your expenses. It’s the only way to know you’re staying within your spending limits and where you can cut back. But you don’t have to do it manually. There are loads of budgeting sites and software to do it for you, such as Mint. It’s free and, when you link your accounts, your spending is automatically added to the categories you set up.

4. Your budget doesn’t have to be monthly

A monthly household budget might be the most common, but that doesn’t mean you have to have one. If you struggle to keep up with a 30-day budget, or find that you overspend early in the cycle and come up short at the end of the month, why not shorten your timeframe? I know people who work best with a two-week budget, or budgeting for every paycheck.

5. Don’t lie to yourself

A few of my budget attempts failed because I budgeted for my best intentions, not reality. For example, I used to have dinner and drinks with friends every Friday night, spending about $50. Rather than including that in my budget, I told myself I’d just stop going.

Of course, that didn’t happen. Instead, I went $100 over my budget every month.

If you’re trying to increase savings, you’ll have to reduce expenses somewhere. Just be realistic about what you’re willing to do without.

6. Use rewards to trick your brain

Another problem with my old budgeting system was that it highlighted the things I didn’t want to do. For instance, I didn’t want to have to skip buying the fancy cheese to keep my grocery budget in check. I started hating my budget.

Now I do it differently. I budget three months in advance, and plan a reward at the end of the third month. As long as I stay within my budget for three months, I can buy myself whatever I want with that reward money. Because I really want those shoes, that nice dinner, or a new stack of books, I’m motivated to keep on track.

Bottom line: I use a few secret hacks to keep myself in check, but those aren’t the only methods available. As long as you come up with what works best for you, it shouldn’t be too hard to stick to your guns and keep expenses tracked and within your means.

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