How to establish and keep a budget

Many people think that sticking to a budget means they won't be able to have the things they want. In fact, the opposite is true. A budget can help you preserve your lifestyle AND pay off debt while saving for the future. But if you sometimes have trouble making ends meet, a formal month-to-month spending plan is a must. It may be easier than you think to establish a budget that will work for you. Use these six steps below and the Budget Calculator to get started.
1. Set Goals. If you don't know where your finances are going, how can you reach your destination? Establish your own desired goals for paying down debt and saving money for the future. Goals are a road map to where you want to be.
2. Determine Current Spending. Write down everything you spend over a three-month period. Try to account for ALL of your spending. If you pay by debit card, check your receipts. If you spend cash, write down what it's for.
3. Determine Your Current Budget. Take the information from Step 2 and put it into the Budget Calculator to determine what your current budget would look like based on your present spending habits. You will be able to recognize the excess right away and see where your problem areas are.
4. Create a New Budget. Now it's time to redirect some spending in ways that will help you reach your goals. If you can, try to find ways to free up more money for savings or to pay off consumer debt.
5. Measure Your Progress. Continue to keep records, and once every three months assess your progress. Are you paying down debt? Are you building your savings? As you go along, you may need to reassess either your goals or your budget.
6. Reward Yourself! Your budgeting efforts should be a combination of hard work and fun, so create a reward system that accompanies each of your financial goals. When you make progress, reward yourself in some small way — have dinner out or go to the movies.