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A lot of times when people make up a budget, they put down what the think they should be spending or what they wish they were spending. They're then left wondering where the rest of the money goes. The only way doing this could help you is by showing you what your goals will be.

Establishing and sticking to a budget can be difficult sometimes. The trick is to make an itemized realistic budget. Not doing so is the reason most budgets fail.

To establish a realistic budget, sit down with your past three months (or more) of bills, and any receipts you may have, especially grocery receipts. With the tools in front of you, figure out what your average monthly bills really are. Write these figures down, along with your best estimate on what you spend on certain things each month.

Things to include are food (make a separate column for dining out), gas, household supplies, any vices you or your spouse may have, gifts. Seeing how much you actually spend on certain things each month will help you realize that it all really adds up.

Compare this budget to the one you first made. The one with the costs of everything where you think they should be. Use your realistic itemized budget to figure out where you can cut costs, and where you can afford to spend more.

In most budgets, one of the biggest expenses is food. One way to cut this down is by not eating out as often, or setting a price limit before you even open the menus. Another way is to examine your grocery receipt better.

Are you buying items on sale and stocking up? Or do you come home from the store wondering how half of these things ended up in your cart? Do you use most of what you purchase, or do you find yourself often throwing out more then half of particular items?

Another big expense on most budgets are people's vices. Some common ones include smoking, shopping, betting, caffeine fixes, and entertainment. These things really add up quick.

Sure $15 here or there on a great deal' or a sure thing' isn't much, but think that a few times a month and it really is. You never realized how quickly that $15 turns into $45 or $105 did you?

If you must continue doing these things, why not try to find ways to do them that will save you money. If you smoke, make your own. If you're a shopaholic, put the item on hold and come back later for it if you must, you need to resist the impulse purchases. If you like gambling, only bet small amounts. Make your coffee at home, treating yourself with flavored creams or whatever you indulgence might be. Shop around for the best deals on entertainment, use coupons, or split with a friend.
Once you get the hang of it, cutting down on your spending really isn't that hard. The hardest part about making a personal financial budget is sticking to it. To be able to stick to it you need to realize why you're making a budget.

So why are you making one? Is it because you always run out of money before the next pay-day? Could it be that you want to save for a down payment or your childrens future? Are your trying to get out of debt? Or do you just wonder where all your money goes, because you honestly don't know?

Knowing why you are making a budget is the first step in sticking to it. Once you have your budget completed and you see how much you're really spending, you'll then think about your goals before you spend on something you know your budget won't allow.

Will just knowing that you're improving your financial situation be enough for you? If you don't think so, then set aside some of the money you were overspending on other things and treat yourself every couple of months or so. Don't over indulge, but realize that for your dedication and self improvement, you deserve something nice.

Learn more about this author, Holly Jindra.
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