Ten Tips When Creating a Budget

Set aside time to work on your budget together.
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Creating a budget may sound scary, but it's really no more than making a to-do list for your money. A well-planned budget can help you track your spending, manage your bill-paying, and save for your future, whether your time frame is six months or 60 years. If your current money management plan has you counting pennies to buy your coffee at the end of the month, it's time to sit down with your pay stubs and bills to work out a budget.

Set Savings and Spending Goals

Sit down together and decide where you want to be financially in six months, in five years, in 10 years and further down the road. Your goals may include saving a specific amount per year, saving toward a defined purchase, or paying down your debt within a specific time frame.

Put It in Writing

The act of writing something down makes it more real and increases the likelihood that you'll stick to it. That's Psychology 101, but it should be part of Budgeting 101 as well. Write down your goals, write down your budget plan, and keep track of your daily spending in writing.

Schedule Time for Your Budget

Creating your initial budget takes time. Set aside a chunk of three to four hours to sift through bills, craft your goals and write up your budget. Don't stop there, though. Your budget also needs regular upkeep. Schedule weekly or biweekly sessions to track savings and spending, pay bills, and assess your progress toward your goals.

Automate Your Savings

Avoid the dangers of procrastination and the temptation to spend your savings by letting your bank take care of the details. Set up an automatic transfer from your checking account to a savings account to make sure that it gets done. Check with your bank for other tools and programs that can help you save more or save faster.

Regulate Your Expenses

Budgeting fixed expenses is less complicated than dealing with expenses that vary from month to month, so fix as many of your regular expenses as you can. Work with your utility companies to split your estimated annual bill into 12 equal monthly installments to make budget planning simpler.

Plan for Recurring Expenses

Don't let upcoming expenses throw your budget out of whack. Save ahead for recurring expenses, such as water bills and excise or property taxes. They'll be easier to handle if you put aside a small amount from every paycheck specifically to pay those bills.

Use Graphic Reminders

It's easier to stick to a budget when you can see your savings adding up. Draw a big thermometer on a piece of poster board and hang it on the wall. Number it in tens or twenties. At the end of each week, color in your savings for the week so that you can see your progress toward your savings goals.

Schedule Savings Rewards

Budgeting, like dieting, is hard to swallow if you can't take a break once in a while. Give yourself a break now and then by scheduling rewards when you reach lesser savings goals. Splurge on dinner for sticking to your budget for three months, or treat yourselves to a movie when your savings hit the halfway point.

Snowball Debt

If paying down credit cards is one of your major goals, try snowballing it. Calculate the total amount you need to pay the minimum amount on all of your loans and credit cards, and how much more than that amount you can afford to pay each month. Add that extra to the minimum amount on one credit card and pay it each month until the credit card is paid off. When you've zeroed it out, take the whole amount -- including the minimum -- and add it to the minimum payment on your next credit card. As you knock off each credit card, your "snowball" payment will grow larger, and you'll be able to pay them off faster.

Bank Surprises

Tuck Christmas and birthday gift money, tax refunds and unexpected bonuses into a high-yield savings account. Use gift cards to pay your regular expenses, and transfer the cash you would have spent to your savings account.

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