You could be in charge of a huge company’s budget, such as Peter Briger, but most people are simply trying to manage their household’s spending habits. When it comes to money management, many people are in the dark about the best way to save and spend their funds. With credit card interest rates spiking at all-time highs, it’s important to spend less than you make to avoid any major financial catastrophes.

5 simple steps to stay on track

Create a Budget

The most in-depth part of money management is creating the initial budget. Look through all your past spending for the entire year. Make notes of all utilities, entertainment, mortgage and other payments necessary for everyday life. The best way to organize this information is by categorizing it. Groceries, vacations and electrical bills are all starkly different charges requiring various categories to organize the information, for instance. With everything divided out, you can instantly see where all your money is being spent.

Be Honest With Yourself

Part of budget creation is being honest with your income and spending habits. If you know you want to spend $100 a month on entertainment expenses, for instance, you’ll have to reduce your spending in other areas. Your income may not be as ample as you’d like either, so work with the numbers you have. Don’t rely on possible future employment bonuses or borrowed funds to pay the mortgage, for example. Consider any extra income a bonus and save it.

Financial Buffers are Critical

Avoid budgets where all your money is tied to bills or outright spending. Create a budget buffer with $100 a month going into savings or $2,000 each year entered into a certificate of deposit. You need some liquid assets available if an emergency occurs. If the car breaks down with a $3,000 bill, you don’t want to rely on credit cards or high-interest loans to pay off the amount. Rely on yourself with an emergency buffer built into your budget.

Don’t Be Afraid to Say No

Your spouse and kids may want to purchase that big television, but you know it’s just not in the budget right now. Share the budget numbers with the adults in the home to help everyone understand where the family is financially. Everyone can agree on which items to save up for or simply forget about until next year. Financial knowledge reduces the chances of one family member heading out on a shopping spree, for instance.

Treat Yourself Periodically

It’s impossible to not spend some money for fun, so add a miscellaneous component to your budget. Treat yourself or a family member to a spa day or other diversion that’s not a household necessity. Have some fun with your funds while keeping the family protected with savings in case of emergencies.

If you’re struggling with money management, try to take a class taught by a financial professional. Take those suggestions and apply them to your spending habits. Even if you curb some of your spending, you’ll see a dramatic difference in budget management. Your goal is to always have some funds leftover at month end to shore up any savings.

Are you on track?