Making Your Budget Work

Once you’ve decided how much you plan to spend on each category in your budget, you’ll want to try to stay on track. One approach, as each month goes by, is to subtract the money you spent from the appropriate budget category.

Some of this recordkeeping will be easy. If your rent is $650 a month, what you allocated and what you spend will offset each other exactly. But what happens if you allocated $200 for restaurant meals and by the middle of the month you’ve already spent $220?

Each time you’re considering an expenditure, the ideal approach is to check first whether it fits into your budget. If there’s not enough left in the category where it logically belongs, you have to decide whether you really need it, and if you do, how much you can take from another budget category so you can afford it. The bottom line is that by sticking to your budget, you can keep your cash flow — and your financial outlook — positive.

It’s also smart to create an “untouchable” budget category of certain critical, usually fixed expenses. This could include your rent, utilities, student loans, or college savings. This way, you won’t be tempted to spend money that you really should be allocating to these essential areas.

Don’t torture yourself, though. Include money for fun in your budget and use it to do the things that are important to you, even if you don’t do them as often as you’d like.

Got the budgeting blues?

If you’re like most people, the idea of budgeting may seem like as much fun as studying for a final exam. And if you think of a budget as a system of denying yourself the things you want, naturally you might resent it or, worse yet, quit trying. But if you instead think of a budget as a way to get more of what you want, not less, you’ll realize that managing your money is actually a positive, empowering act. You’re making every dollar count.