Top Features of a Successful Budget
In all the budget bloopers and blunders seen, the same few problems keep popping up. To avoid them, here are the top ten most important features of a successful budget.
- Work your budget categories to fit your personal situation and your spending habits, not somebody else's.
- Make accurate income projections, not what you just hope for, and don’t forget about tax.
- The first line category is for your savings so you treat your savings account just as you would any bill you owe.
- Enough sub categories to give you a meaningful view of where your money goes and where you might be able to cut costs, but not so many that tracking is a chore that you'll soon tire of.
- Include expenses that don't occur on a monthly basis, such as vehicle maintenance, insurance, property rates, service contracts, etc.
- Regularly review expenses and brainstorm about ways to trim costs in each category.
- Out of pocket cash expenditure tracking and recording. Cash spending is the biggest leak in most budgets. Cash disappears quickly and if you don't write it down you'll have a distorted view.
- Realistic written goals. Budgeting isn't about only tracking your costs it's about setting financial goals (saving for a house deposit, a new car, getting out of debt, saving for retirement, kids education, travelling, etc.) and finding ways to meet them. Without goals, your budget is just a pair of unwelcome handcuffs.
- Look for spending patterns you may not have been aware of when you weren't tracking your spending and decide on any actions needed.
- Most importantly with a balanced budget the reward is internal motivation and a positive attitude!
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