Maintaining Your Budget Long-Term

               I have written several blogs in the past concerning the importance of writing out a household budget.  As I see it, there is really no more important piece to your financial well-being than an accurate and realistic budget listing all of your income and expenses.  I often meet with potential clients at Halcomb Singler, LLP, who have no idea what they are spending per month on their various living expenses.  I see this as a key reason that people have financial problems.  If you have no idea what you are spending how do you know if you are spending more than you can afford?

              When setting up your budget remember to include the little things like clothing, dry cleaning, postage for bill payment and entertainment.  Don't attempt to set up a budget where you spend 0 per month on entertainment, clothing and car repairs.  A budget that doesn't take these expenses into consideration isn't reasonable and you are just setting yourself up to fail.  If you can't get the budget to balance when taking into account all reasonable expenses it is time to get another source of income.

              In my opinion, setting up your budget is the easy part.  There is no point in setting up a budget if you aren't going to stick with it.  And I will not tell you sticking to a budget is easy.  If it was fun to have a budget everyone would have one....and I can assure you that not everyone does.  So, I have been thinking that there must be some way to make sticking with a budget more attractive.  One component that every budget must have is money that goes directly to savings.  I am not taking about the money that comes out of your paycheck to put into your 401(k).  I'm talking about money parked in a savings account or money market account that you can get to fast in case of an emergency.  My number one tip for helping you stick to a budget is to make benchmarks for your savings and as you hit each benchmark give yourself a reward.  For example, if you currently have $1,000.00 in your savings account give yourself the goal of reaching $2,500.00.  When you get there tell yourself that you can spend an extra $100.00 the following month on whatever you would like.  For example, taking you spouse out to a special dinner or buying that new pair of shoes you have had your eye on.  As your savings builds to higher amounts, the amount of your reward can grow.  For example, when your savings reaches $50,000.00 (which it will if you stick to your budget over time), use the money you would have spent funding your savings over the next several months to take a vacation.

           Outside of small rewards for yourself, another way to stick to a budget long-term is to realize that your budget is going to change.  I recommend that you have a budget for each month based on the income and expenses of that month.  This is important because it is not likely that you income and expenses will be the same each month.  For example, if you receive a pay check bi-weekly there will be a month every once in a while where you are paid 3 times.  If you fail to take this into account in your budget there is a good chance that the extra paycheck will disappear and you will have no idea where it went.  It is also extremely important that those who are self-employed and have variable income readjust a budget each month.  For the self-employed some months will be great and others will be terrible as far as income is concerned.  There is no constant income, so it is important to sit down and decide where your money will go that month.  Since no self-employed person knows how much money they will make next month, I recommend using your income from last month to complete your budget for the next month.  For example, I pay myself on the last day of the month.  This allows me to plug in my actual income to my budget for the following month.

             Finally, one of the most important things you must have in order to maintain your budget long-term is discipline.  No doubt it would be more fun to go out and blow all of your money on whatever thing you want right now and keep no records.  However, if you maintain a budget and stick to it over time you will see yourself begin to build wealth, will waste less money on unnecessary or unknown spending and will be more happy in the long run.  If you have any additional tips on how to maintain your budget in the long-term please post them to the comments section.  As always, I enjoy your comments.

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.