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Are you budgeting the right way?

Sarah Kaufman



Most of us have a love-hate relationship with money: We love it when we have it, we hate it when we don’t and, generally speaking, we always want more of it. But whether we’re rolling in disposable income or living paycheck to paycheck, it’s important to track the money we do have in some measurable way to avoid the damaging financial consequences that come with fiscal irresponsibility. Here are a few things to remember when you are either starting out with a budget or reworking the one you already have.

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Budgeting is not that hard. So much of what stands in the way of being responsible with personal finances is merely attitude. The word “budget” can be terrifying to some people, so much so that it sends them fleeing in the opposite direction to the point of spending frivolously. But it’s really not that scary. When you’re learning how to make a budget, the first step is to accept the fact that you do need to track your spending, if for no other reason than to give yourself peace of mind just knowing that you’re being responsible with your money. Budgeting doesn’t mean having to forgo a financial splurge once in a while — it just means you’re planning for those splurges so that you don’t dig yourself into a financial hole later.

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There’s no one-size-fits-all budgeting technique. We all spend our money in different ways. If you love winter sports, then your budget may include room for a monthly ski resort pass every winter. If you love to travel, then you may set aside a certain amount of money for an annual vacation. It can be useful to discuss your budgeting methods with your friends and relatives, but avoid delving too deep into a conversation about what you make room for — everyone is different when it comes to what’s important to them and how they spend they’re money. And that’s OK!

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Set it and forget it. After you’ve determined how much you can spend in each category (e.g., food, housing, entertainment, etc.), all that’s left to do is follow it. That doesn’t mean you have to stick to your spending limits so carefully that you’re spending more time looking over your budget than actually using it. It just means that overall, you have an idea of where you’re money is going and you’re not overspending where you shouldn’t be.

Revisit and rework. Once you’ve been using the same budget for a while, come back to it and see if you can make any changes based on change in income, change in your personal cost of living, or another factor that may influence how much money you spend. Did you get a raise? Or do you need to cut back on spending? See where you can make new cuts (e.g., are you really using that gym membership?) or where you can spend more.

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