These Five Super Easy Steps Are All You Need to Create a Budget

Every money guide you’ve ever read tells you to create a budget, so why haven’t you done it yet? Most people think that budgeting is too much work. Not true! Here are five super easy tips to help you easily create a budget that will save you money.

1. Let Software Do All the Heavy Lifting

When it comes to creating a budget, getting started is often the hardest step. You may imagine that you’ll have to dig all of your receipts out of your purse or comb through your credit card statement and spend hours building an Excel grid. That’s way too much work! Instead, use budgeting software to do the work for you. Programs like Mint.com, Moneydance, You Need a Budget, and Quicken Personal Finance (just to name a few) can automatically load your transactions (you’ll need to input cash transactions) and put them in categories, which you can tweak and revise to fit your style.

2. Review budget categories in which you spend the most money.

With your new budget software always working for you, it’ll be easy to review your spending each month to see which categories you spend the most in. Get ready to be surprised. Yes, you DID spend that much going out to eat last month! Trimming 5 or 10 percent from these categories will make a big difference in your savings. Prime categories to trim are:

Groceries
Entertainment
Meals out
Clothing

3. Track a few categories in detail.

How much do you spend on each type of family recreation? What do lunches out cost each month? What do you spend on cigarettes, alcohol, candy bars, and fast food? The answers may shock you into fiscal responsibility.

4. Keep track of your cash.

If cash sifts through your fingers, keep a slip of paper and a pencil stub in your purse to record each cash expenditure for a few weeks. Every time you take out your wallet, jot down the amount you spent and what you bought. You can then manually input these expenses into your budgeting software. This will reveal budget leaks that can be stemmed without drastically affecting your lifestyle.

5. Review your habits.

Your everyday habits could be costing you unnecessary money! Even small tweaks can add up to big savings over time.
Do you routinely take several trips a day in your car on errands that could be bunched to save gasoline and wear and tear on your car?
Do you spend money at the corner grocery for items that could be purchased less expensively on your weekly supermarket trips?
Do you watch all the cable channels to which you subscribe?
Is call-waiting really necessary on your telephone? In fact, do you even need that landline at all?
Could you wait to place long-distance calls until the rates are cheaper, or use a less expensive long-distance service?
Would recycling cans and bottles earn you money while you save the environment?
You will never overcome your money bad habits if you can’t see the problem and make changes. This is why budgeting is so important. It is easier than ever to budget; you just need to make the commitment to follow through and actively manage your financial life.
If you need help staying committed or being held accountable for changing your money habits, start a Money Club and enjoy the learning and support of a friendly group.

(This article was based on the book The Way to Save: A Ten-Step Blueprint for Lifetime Security, by Ginita Wall)

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