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5 Simple Steps to Happy Budgeting

Budgeting is an important step towards reaching your financial goals, but sometimes life isn't as black and white as things look on paper. If you made a budget but still find yourself short on cash at the end of the month, it's time to give your budget a second look. Here are a few quick tips to help you budget smarter and save better.

#1: Be realistic

When making a budget, it's important to be realistic about your monthly expenses. It's always better to overestimate how much you plan to spend in a category rather than underestimate. For example, if you underestimate the amount of money you spend on groceries or gas per week, you're setting your budget up to fail. Instead of guessing, use your past statements to create a more realistic budget. They can help you determine how much you tend to spend in each category and then you can base your budget on that number. If you end up under budget at the end of the month, you'll have leftover money to put into your savings.

#2: Track all of your spending

In order for your budget to work, you have to track all of your spending. It's easy to forget about small, inexpensive purchases, such as your morning latte or that pack of gum you slipped into your cart at the grocery store checkout. Believe it or not, these small, everyday purchases can really add up! Be sure you're keeping track of every transaction, whether you use a journal, a spreadsheet or a free budgeting tool such as Money Management, available through Wright-Patt Credit Union's Mobile and Online Banking. When you track your spending accurately, you'll always know where you stand.

#3: Expect the unexpected

When you first made your budget, you probably made categories for recurring monthly expenses such as food, rent or mortgage payments, utilities and transportation. But did you remember to budget for those “once in a while" expenses, such as gifts, vacations, holidays and car maintenance? These expenses are commonly overlooked, but they don't have to catch you by surprise! Plan ahead for special occasions the best you can but also leave a little cushion in for when those unexpected social expenses pop up.

#4:  Make adjustments as you go

Your budget isn't something that you can “set and forget." If you haven't touched your budget since you first created it, it's probably not going to work for you in the long term. For any budget to be effective, you have to make adjustments from time to time to reflect your changing lifestyle and circumstances. For example, if your income changes, be sure to adjust your budget accordingly. If one of your expenses (such as utilities) is higher or lower than you anticipated, update your budget. It's a good idea to set aside some time each month to review your budget as a household and make any necessary changes.

#5: Try something new

Part of the beauty of budgeting is that it's not one-size-fits-all! If you're not happy with your budget, don't hesitate to switch up your system. Beyond the traditional line-item budget, there are dozens of different budgeting styles and techniques you can try. The most important thing is finding a budgeting strategy that you're able to follow.

Budgeting can be challenging, especially when you're first starting. But the more you stick with it, the easier it will become. Remember, nobody's perfect. If you fall short one month, don't give up. Learn from your mistakes and keep going—you will be glad you did! With a solid plan for spending and saving money, you'll be well on your way to achieving Financial Flexibility and Freedom in the future.

What's your biggest budgeting challenge? Which budgeting method works best for you? Let us know on Facebook or Twitter.

At Wright-Patt Credit Union, we're here to help you manage your hard-earned money so you can live the life you want to live. For more budgeting tips and tools, including helpful worksheets and interactive learning modules, check out our online Education Center.