Disciplining yourself when it comes to money can be tough. You earned that money, so you should be able to buy what you want when you want it, right? And "budget" is often perceived to mean deprivation and no fun. Instead, think of your budget as an achievable spending plan and allow yourself occasional rewards. Make a few minor behavioral changes and focus on the sense of emotional well-being and control over your life.
Categorize your monthly expenses into three categories: "needs," " wants" and "nice-to-have." List expenses such as rent, car payments, groceries and utilities in the "needs" column. Ideally, you should include an emergency fund on the "needs" list. Items such as new clothes go under "wants" and things like entertainment and premium cable channels in the "nice-to-have" category.
Establish goals based on the lists. Cast the goals in positive terms, not as things you have to do without. If you spend $5 per day on fast food lunches, cut back to two fast food lunches a week; bring lunch from home the other three days. Put the extra $15 toward one of your goals. This helps your overall debt situation and still fills your fast food cravings. This type of self-discipline is not hard to turn into a habit, particularly when you see the fruits of your efforts — a credit card balance or your car paid off early, for example.
Set aside enough money each month for the "needs" to cover all your basic living expenses and required bills. Whether you physically set aside the money or do it on the computer, don't let yourself use this money for anything other than the required expenses. Pay more than the minimum on those bills whenever you can. Remind yourself that by paying more toward a credit card bill, for example, you're reducing the balance more quickly and saving money on interest. Tell yourself you can buy a "want" every two or three months so you don't feel deprived.
Resist the urge to buy that new purse or latest tech gadget that's calling your name. Put it on your wish list for someone to give you for an upcoming birthday or holiday. Or set up a money jar specifically for the item. Put the change from your pocket or purse into the jar each evening. If you use coupons at the store, put the amount you saved into the jar. Try to sell unused items at a garage sale or online; put that money in your savings jar, too. You'll be surprised at how quickly the money adds up without taking money away from your required monthly bills.
Pay Down Expenses
Make it easier to resist impulse buying. Carry only as much cash as you're budgeted for each day, for example. Keep one low-interest credit card available to use when necessary; put the others in a container of water and freeze them. You can still get to them if you have to, but the work involved makes it less likely you'll use them for a night on the town or spur-of-the-moment shopping spree.
Use any unexpected income — annual bonus, birthday gifts, tax refunds — to pay down a high-interest loan or credit card. Remind yourself that putting the extra money toward a "needs" item lets you make inroads into major expenses and pay them off sooner. Allow yourself to use a little of the money for a treat from your wish list or put it in your savings jar.
Treat yourself to a small reward occasionally when you achieve a financial goal, such as paying off a major bill, or successfully maintain your new-found self-discipline for a given period. After renting movies all month, treat yourself to a first-run show at the local theater. If you've given up eating out on weekends, allow yourself one dinner out each month. You've still saved money for the month overall and made progress toward developing more disciplined spending habits, but without having to deprive yourself completely of the extras you enjoy.