Budgets and diets fail for the same reasons, deprivation gets old and temptation grows strong. Once you give in and eat something you shouldn't or spend more than you have, the crushing guilt that follows generally leads to abandoning the effort altogether. One thing this recession can teach consumers is that quick fixes don't work and living responsibly isn't a punishment. Developing a realistic budget that not only saves money but directs funds toward the accomplishment of your goals is the most personally empowering financial move you can make.
*Psychological Hurdles*
Sticking to a budget begins with three psychological hurdles you must overcome.
- Own your financial situation.
- Decide you want to change to make your life better.
- Hold yourself accountable and expect to improve over time. (And reward yourself when you do.)
You are the one who spent the money. You can no longer afford a profligate lifestyle. You have the self-discipline to change your habits.
*The Mechanics of a Budget*
Don't make a budget more than it has to be. It's a tool of your making and design, that should include three basic elements.
1. Expense Tracking: The first step in any successful budget is expense tracking. Take 30 days to record all expenses, no matter how small, in meaningful categories (Groceries, Medical, Auto) to understand your current spending patterns.
2. Record Keeping: Continue to record expenses to build running monthly totals. This is a game, people! Compete against yourself to drive those numbers down. The money you save in one area gives you more freedom in another.
3. Cards in the Drawer: Put away your credit cards. You might as well be spending Monopoly money as use plastic. Count out cash or write checks to make your spending real and tangible. It's easy to pretend a credit card balance isn't there, but an empty checking account isn't so easy to ignore.
*Living the Budget*
Obviously if you go on a diet, you can't eat cheeseburgers and fries every day. When you go on a budget, there will be things that have to go.
Refine Your Choices
A latte from Starbucks every afternoon at 3 o'clock? At roughly $5 for a vente cup, that's $150 a month. Buy a smaller version or cut down on the frequency of your visits. You may find that latte actually tastes better and that you enjoy it more when you haven't had one in a couple of days.
Embracing Expectation
Living within your budget doesn't mean you have to deprive yourself, but it does call for embracing expectation. Remember those weeks before Christmas when you were a kid staring longingly at the wrapped packages under the tree? Be honest. Sometimes the wanting was the best part. If there is something you want, save for it or buy it on lay away. Make the wanting part of the pleasure instead of going for the instant gratification hit.
Prune the Easy Stuff
There are many small things you can do that will immediately yield results, make you feel that you're on the right track, and probably generate more cost-saving ideas by association.
- Change all the light bulbs to compact fluorescent and turn off lights you aren't using.
- Turn the thermostat up a couple of degrees in summer and down in winter.
- Talk to your insurance company. Are their reasonable ways to lower the premiums on your homeowners and car insurance?
- Eat at home and reserve restaurants or take-out for special occasions or "treats." (You could add a little weight loss on top of successful budgeting in the deal.)
- Buy store brands instead of the name brands you buy now (for no better reason than your Mother bought them.)
- Clip coupons and use them. (Also, always take a list to the store with an idea for several days of meals in advance. This cuts down on impulse buying.)
- Shop at big box discount places for things that are less expensive when purchased in bulk. (If you don't need that much, make an agreement with a friend to share the cost and split the supplies.)
- Use your freezer. Buy meat and other items on sale and freeze them until needed.
- Turn your clothes wrong side out when they go in the dryer to minimize fading and wear. (Use cold water detergents and shave a little more off the electrical bill for the water you didn't heat.)
*There Has to Be a Carrot*
Finally, reward yourself. Even the most dedicated dieter has the cheeseburger from time to time. When you've had a good budget month, all the bills are paid (and hopefully you've put some of the excess in a savings account for a rainy day), do something for yourself, no matter how small. Remember, this is a lifestyle change, not a prison sentence. You may be surprised how good it feels to take yourself to the movies for a budget job well done.