How to incorporate a budget into your lifestyle

Most people cringe when they hear the word budget. They think, “What more can I deprive myself of. I don’t have much to begin with so let me enjoy a few of life’s simple pleasures.” Budgeting does just that! It helps you squeeze out a few more dollars to be able to splurge every now and then but more importantly, add to your savings so you can improve your quality of life.

The point of a budget is to help you to see where your money is going so you can see the areas where you can cut back. If you think about it, budgeting is not just for people who don’t have a lot of money. All major companies operate by a budget. Oprah Winfrey operates by a budget. She has to. She needs to be able to keep track of where her money goes, just as we all do. Budgeting is a way of keeping your finances organized, whether you have a little or a whole lot of money.

Here’s how you can incorporate a budget into your lifestyle:

• Start by using a spending log for a week or two to see exactly what you spend your money on. Write down everything you buy whether it’s a newspaper, can of soda, groceries for the week, eating out or what you spend on entertainment. This will help you come up with your average monthly expenses. Along with your average spending, be sure to include your monthly bills, to come up with your total monthly expenses.
  
• Then figure out what your total monthly income is after taxes. Once you come up with a number, subtract your total monthly expenses from your total monthly income. Hopefully the number that results is a positive number. This means you have a surplus and you have money left over. If you have a negative number, a deficit, this means you spend more than you make and you need to cut back.

What to do if you are in a deficit:

• Look back to your spending log, particularly those flexible areas like eating out and entertainment.
• See if there is any way you could cut back. Perhaps instead of eating lunch out at work everyday, maybe you can bring your lunch 3 times a week to save a little money. Instead of going to see an evening movie at the cinema, see a matinee, which is usually cheaper.
• You can always find painless ways to cut back. If you feel it’s too painful to bring your lunch to work because eating out breaks up your very stressful workday…fine. Just find another area to cut back on until you no longer have a deficit.

What to do if you are in a surplus:

• If your budget reflects a surplus but you do not see this extra money at the end of each month, use the spending log again to help find areas where you do not realize you are spending money.
• You’ll be amazed to see how frivolously your money is being spent when you actually write it down! This will make you more aware of your actions and may make you think twice before you spend.
• Now determine an amount that you can reasonably afford to put aside for yourself into a savings account, retirement fund, college saving plan, etc. Make it a priority to pay yourself first!

We can all live with what we have if we change some of our old habits. When there’s a will, there’s a way.

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