In addition to consolidating debt, as highlighted in our previous post, various budgeting tools and practices can help reduce your stress while helping you gain ground on achieving your financial goals.

Understanding Your Ins and Outs

The first and most important step in creating a budget is knowing where you want to go with your money. Then you need to track all your income and expenses. Your budget destination tells you why you are working so hard daily to cut expenses and capture savings. Putting a picture of your goal on your refrigerator or in plain view keeps that destination close in mind. Oftentimes we “budget” monthly bills, but do not budget our everyday expenditures.  For example, you might get paid twice a month and must pay seven different bills. When you diligently track what comes both in and out of your account, however, you can see where your money really goes and realign your spending with your priorities.

Taking Control and Owning Your Choices

Taking control of your spending is important, but focusing on what we call “spending balance” is also key to your financial well-being. Money can be emotional! If you don’t have enough money, it can cause stress. When you’re sitting flush, you’ll have more of a sense of freedom. Spending discipline is necessary, which may mean sacrifice. It doesn’t mean always going without, however.

Our best advice? Take control of how you spend your extras. Track the “outs” and determine which are absolutes (housing, groceries, insurance, etc.) and which are extras (streaming services, eating out, daily coffee or gas station stops, etc.).  This helps you identify spending leaks that you can direct toward your important goals.

A great “spending leak” example is grocery shopping. If you’re that shopper who wanders the aisles grabbing stuff rather than shopping with a list, you’re almost guaranteed to spend more. Placing your order online and then doing the parking lot pick-up can help you shore up that leak and avoid overspending temptation.

Make It Work For You

When it comes to tracking your budget, what works for one person may not work for you. There are many options to choose from, including paper registers and journals, budgeting apps, savings methods and even categorized spending accounts.  If you choose the electronic route, do your research to make sure it provides what you’re looking for.

Some have great success with the “envelope method;” others like to set up a savings account for each spending category. Once you find the method that works for you, put it into practice and allow yourself to be excited for the work you’re doing to reduce your stress and achieve your goals. Only you can take the steps needed to better your financial life. Start small, start now. These changes will make a difference and help you get where you want to be.

Sign up for Homeword’s Financial Skill Building class to learn more about creating a budget that works for you.