Tips for making a budget
I've been testing various budget ideas for a while to find out what works and what doesn't. Here are some of my top tips:
TIP 1: Set your budget at a slightly uncomfortable level.
If the amount of money your budget allows you to spend is too high, you won't get any benefit. You will just carry on spending as you did without the budget. You'll know your budget is too generous if you feel entirely comfortable sticking too it.
If the amount of money your budget allows is too low, you won't be able to stick to it. Sticking to it would require a drastic change in your lifestyle, which is a hard thing to deal with. You'll know your budget is too tight if you feel uncomfortable trying to stick with the budget.
The ideal situation, as I see it, is that you should feel slightly uncomfortable. This way you will have to make a few cut-backs (spend slightly less on groceries, have one less drink on a night out) in order to meet the budget. But you'll be able to do it because it isn't that hard. And that's when you'll save money. Eventually, you should find that your lifestyle changes to match your budget. When that happens you'll find yourself becoming comfortable with the budget. You will then be able to tighten it a bit further.
TIP 2: Give yourself a weekly cash allowance
Doing your budget weekly keeps you focused on it. Holding all your money in cash and paying for everything in cash lets you see exactly how your budget is doing. It is much easier to overspend if you use a credit/debit card.
TIP 3: Take out only as much as you need
Whenever you go out somewhere - shopping, pubbing, etc. - figure out before you go how much you are willing to spend. Then take only that amount, in cash, and leave all bank cards behind. If you do this, it's simply not possible to overspend.
I'm sure I had another couple of tips to add, but I can't remember them right now. I'll post them as soon as I do.
ps.. found you through blogexplosions!