Making a budget is a very essential part of today’s life besides water and food. Everyone earns money from just one source – their income (in the case of you being someone’s dependant then you access only one other person’s income) for multiple monthly and daily needs and requirements. So keeping a budget is a definite need for everyone (unless you are a rich heir or heiress with lots of money to spare!).

Making a budget to lead a comfortable life is not hard. The best way to make one is to learn through trial and error. The reason most people usually need budgets is 1) To make their money last till they get their next pay cheque and 2) To save some money at the end of each month or 3) To pay for a certain big expense (buying a house, car etc)

It always helps to have a budget that leads to you having some savings at the end of the month. Savings after-all really can come in handy on a rainy day (what will all these recession fears around).

Set your targets first before making a budget. You need to know what your budget is for and if its purely to save money then how much do you want saved by the end of a year is crucial to know.

Start by making lists, lists and more lists. Make one list on absolutely-needed monthly grocery / household supplies. Include items like cleaning supplies, vegetables, toiletries, maintenance products etc in this list. Note the average amount you usually spend per month on these products.

Another list based on shopping expenses (for personal items / decorative items that you “just have to have” and eating-out expenses). When its time to total you will probably be alarmed at how much you spend on this list and will be easily able to cut them.

• Record the number of times you go out each week and limit it to once or twice to start with
• Order lesser drinks, you will save a lot more money that way. If you’re going out to eat, order the medium priced dish on the menu, not the most expensive one!
• You can also split the bill to save costs.
• When you shop for clothes, buy things you need, not things that just look good. Furthermore, you don’t need to shop every month! Go once in 2-3 months to respect the budget!

On a Sunday afternoon, when you have time on hand and can think with a straight head, compare the two lists and cancel out things you could do without. For instance, why have the need to buy 3 pairs of earrings in one month? Sit with one list at a time and cancel out things you can do without.

After that make a separate list for gas expenses and another one for bill payments. Total the amounts separately for all the 4-5 lists that you have made. Compare the totals of all the lists. If you realize that your monthly bill expenditure is way too much, cut down.

• Review your Internet bill, find a cheaper plan or don’t use the net at home.
• Own one phone connection. Because it’s a waste to have more, quite honestly.
• Assess ways to cut down on gas expenses too (take a bus, use a bicycle when you go close distances, or simply just walk). It’s a great way to stay healthy too not to mention that you’ll be doing a big favor to the environment.

Once you’ve figured out where you can cut expenses, start respecting the list and don’t spend more money than the limit you’ve now set for each category of expenses.

Keep a margin for sudden expenses handy too. You never know when you’re going to suddenly need to buy a gift for a friend’s new born baby or wedding!

TIPS TO STICK TO THE BUDGET

1. Keep two bank accounts. One wherein you get your salary and the other wherein you transfer the money you intend to save per month right at the start of the month itself. Once that money is blocked and out of reach, use your salary account to make payments and manage expenses. Make sure that you lock your credit card access to the other account so even if you are tempted to use that account, you can’t and therefore don’t.
2. Look for sales and discount stores to shop at. Hunt for deals in local newspapers and avail of all the exchange offers in your neighborhood.
3. When it comes to entertainment, start having house parties or pot lucks. Let everyone contribute to the food and drinks and fun and games so that everyone saves some money at the end of it.
4. You could maybe have a good friend act as a sort of controller for you. Tell your friend your plan and share your budget details. Let your friend help monitor your expenses to help keep you in control.
5. Lock your savings in investments so that you don’t have access to the ready cash. When you have access to ready cash, you tend to spend more. When you don’t have access to ready cash, its easier to live with what you have and save…furthermore, your investments will not only help keep your savings intact, it will help you earn interests on the schemes you choose.
6. Keep your budget notebook handy at all times. If towards the end of the month you realize that you’ve spent lesser money on a certain category of expenses, then use what you’ve saved to buy a small treat for yourself. Have control over your will power. Don’t treat yourself if you’ve saved money in one category and spent more than the budget on another. In that case, you’ve already lost. Be in control and be wise.
7. If you foresee a major expense in the near future, try and stick to your budget by making adjustments within the categories. Spend lesser on groceries or personal items. Cut costs with your ready cash before you decide to use your hard earned savings.