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July 12, 2010

Revisiting Your Budget

Budgeting is the surest way to know where your money is going. If you don’t have a budget, summer is a great time to start planning for the school year ahead. If you do have a budget—great! Take the time to make sure your budget is still working for you.

Budget in 3 Easy Steps

Budgeting doesn’t have to be complicated at all. In fact, you can budget in 3 easy steps:

  • Identify how you’re spending your money right now.
  • Identify all sources of income.
  • Set goals that reflect your true financial picture.

Bullet number 3 means to look at your situation realistically. Saving $10,000 in a year sounds like a good idea, but the reality is, that’s an unattainable goal for a lot of people. If you make your financial goals too lofty, you’re bound to get discouraged. It’s better to take things slow and make real progress.

Budgeting Strategies

Now that you’ve committed to setting a budget, it’s time to strategize. Here are some things to keep in mind:

  • Know where your money goes. Set aside a week or 2 to track all of your expenses so you get a clear picture of what your spending habits are.
  • Start saving for anticipated big events and emergencies. Are your tires going bald? Is your cousin getting married out of state? If you save for coming expenses (and set aside money for unforeseen emergencies), those things will put less of a strain on your wallet when it comes time to pay for them.
  • Make saving a habit. Who says saving has to be grand? Setting aside just a little money each week will help you make a habit of saving. It will also help you build a security cushion.
  • Stick to your shopping list. Nothing sends your budget spiraling out of whack like impulse spending. Plan ahead for what you want and need, and then stick to it!
  • Know the difference between want and need. Budgeting doesn’t mean you can’t have fun. But knowing what you want versus what you need will help you prioritize what you should spend money on first.

Using these tips, you will be able to create an easy-to-use, easy-to-maintain budget. And if you need more help, check out our budget calculator and budget worksheet (pdf, 0.34 MB).