How to Budget Realistically

by Jagg Xaxx
To budget realistically, be honest about your needs and wants.

To budget realistically, be honest about your needs and wants.

Keeping a budget is an essential part of managing your money properly and keeping yourself out of financial difficulty. While it's important to keep your spending levels below your income, it's just as important to be realistic about your goals. Well-intentioned people who set unrealistically strict budgets often find themselves abandoning their plans after only a few weeks. Create a budget that strikes a healthy balance between responsible spending and enjoying life, and you'll be much more likely to maintain it for the long term.

1. Provide for your needs before your wants. Be sure that your groceries, debt payments, utilities and rent or mortgage are covered first. This provides you with a stable basis on which you can plan your more optional spending.

2. Minimize carrying costs such as credit card debts, utilities and insurance premiums. Responsible budgeting isn't about wasting or self-denial; it's about getting what you need at the best price. Paying off your credit card balance every month eliminates monthly interest payments. Using efficient lights and appliances reduces your utility bills. Shopping around for the best insurance plans may save you hundreds of dollars every year.

3. Reward yourself periodically for meeting financial goals. For example, spend a weekend at a lake or having fun in a city when you succeed in paying off your student loan. Developing the self-discipline to eliminate debts before having fun can leave you in a much more secure financial position over the long term.

4. Plan ahead when buying food, clothing and consumer durables. Buying in bulk, clipping coupons and watching for sales can all help you save a lot on food. Spending more on high-quality clothing that lasts is more budget-smart than buying inferior clothes that don't last. Never buy expensive items such as a TV or computer on a whim. Shop around, learn about your options and mull over your decisions for a few days before acting on them. Expensive whims often evaporate over the span of two days, saving you a lot of money.

About the Author

Jagg Xaxx has been writing since 1983. His primary areas of writing include surrealism, Buddhist iconography and environmental issues. Xaxx worked as a cabinetmaker for 12 years, as well as building and renovating several houses. Xaxx holds a Doctor of Philosophy in art history from the University of Manchester in the U.K.

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