by Judy Lin

Created on: July 20, 2008

The art of sticking to a budget lies in having a budget that you can stick to. Many people approach budgets like they do a diet: "I'm going to save $1000 a month and become a millionaire by the time I'm forty!" Except they forget that their income is only $2000 a month and winter's high gas prices are just around the corner.

Sticking to a budget is a two-step process (and unlike most gimmicks, this really is two steps): knowing what you spend, and knowing how you should be spending. For many people, the difference between these two numbers can be quite astounding. Forget the percentages and what-all that the financial gurus say you should be saving, for now, and figure out what you're spending. And be honest with yourself. Change isn't going to happen if you're too ashamed to admit spending $50 a week at McDonald's.

If you can't remember what you spent at the mall the week before, start keeping your receipts and adding up the sums when you get home. You may have to do this for a week or two to get an adequate idea of how much you spend. If your bills come at different times of the month, consider waiting until the end of the month before you make a budget (alternatively, you can ask the company to change your billing cycle). The point of this is to have an accurate assessment of where your money is going.

At this point, it should become obvious that what you bring in-the money that ends up in your bank account-should be more than what you spend. If that's not the case, then making a budget and sticking to it is even more important.

If you're already appalled by where your money is going, then the next part, knowing where your money should be going, should be a piece of cake by comparison: deciding to spend less on movies, gas, junk food, electricity, water, etc., is a relatively simple decision to make. The question is, how to do it?

First, you have to be realistic about where you can cut back. If you want to cut back on the gas bill, figure out first what you can do. Turning down the thermostat by a few degrees will help, as will sealing off the windows with insulation and caulking, but you're not going to magically decrease your gas bill by 75% (global warming takes a little longer, I'm afraid). Trimming utility bills usually requires some kind of investment up front, be it in fluorescent bulbs or a low-flow showerhead, and it may be a few months before the investment begins to pay for itself. Food bills are another major expense. You can't stop eating altogether,

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