If you have tried to stick to a budget in the past and have failed, fear not, it CAN be done! Creating a budget is very much like creating a diet and exercise plan to lose weight: you need guidelines, goals, measurements, rewards, and ways to combat setbacks or unanticipated events. The problem with most budgets, as it is with most diet and exercise plans, is that they are either too vague or too restrictive – they just don’t take into account the way we live our lives and the unforeseen events that can cause us to veer off the path to our goals.

Paint your financial picture. To get started with creating a budget, you will want to paint a clear picture of all money that comes in, and goes out, on a weekly, monthly, and annual basis. While we have all heard of the ‘latte effect’ of spending hundreds of dollars over the course of a year on that once-a-day coffee habit, when we only take into account our daily or weekly spending, we lose sight of those expenses that pop up once or twice a year. Be sure to include things such as:

  • Utility billsCreating a budget you can stick to
  • Health and dental co-pays and out-of-pocket costs
  • Veterinary expenses
  • Property taxes
  • Clothing
  • Hair, nail, and other beauty costs
  • School fees
  • Gift-giving
  • And all of those other random expenses that won’t show up in your weekly budget!

Switch up your habits. Once you have a clear picture of your spending, try cutting a few things out in order to save money. Important tip: Replace them with a reasonable alternative. If you are scaling back on your daily latte, perhaps you can invest in a small barista machine for home or a fancy travel coffee cup to spice up that cold-brew. Or, if you plan to save money by cutting out weekly manicures, pick up a few bottles of high-quality polish you can use at home to achieve a similar effect.

Categorize your expenses. No one knows your lifestyle better than you! When creating a budget, it is important to categorize your expenses by type and level of necessity (mortgage = home expense and high priority; monthly hair appointment = personal care expense and moderate priority, etc.) This will help you see where your money is going each month, how much you are allocating to each priority level, and where you can save money.

Track your spending. Finally, use an automated tool like CardValet or Mint.com to track your spending in each of these categories, so you can be sure you are staying within budget or work on getting yourself back on track before it goes too far.

And there you have it – creating a budget that you can (finally) stick to! Be sure to make an appointment with yourself every few months to sit down and review your budget to make sure it is working for your current goals and realities.

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