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I have just 25 minutes to speak about budgets at an upcoming conference – such a short period of time. As I started to prepare my talk I realized staying on budget and out of debt has only five key points.
1. You have to want it. No seminar, book or popular online money management software will help you to stay on budget unless you really want to. It’s like quitting smoking cigarettes. You must make a firm and true decision to DO IT!
2. Spend less than you make. Oh so easy to say but that is the bottom line. Somehow you have to increase your income and/or decrease your outgo until you are spending less than you make. It’s simple math.
3. You have to spend time looking at actual numbers. Our finances have become so automated that you can get paid, buy your food, pay your bills and transfer money to your significant other’s account without ever having to actually confront your economic condition. I spend at least one day a month going over my finances with a fine tooth comb. I examine all the receipts and evaluate where we are spending money. I balance every month’s statement and earmark money for upcoming expenses (like my daughter’s birthday or a new mattress.) I do most of my accounting with pen and paper. Bargain Babe has a 15-minute budget that is fairly simple.
4. Spending should not be an emotional decision. I don’t buy something (like a $750 leather jacket) because I “just HAVE to have it” or I “can’t live without it.” If I want it so badly, I should plan for it. Most often, all the items you buy on impulse won’t stand the test of time. Of course, I have a slush fund built into my budget that allows me the luxury of buying a little something (like a pretty hair clip) for myself when I see it – IF I really want it.
5. Ensure that the entire family understands and agrees with the above four items. It is vital that everyone is on the same page when it comes to budgeting. If necessary, have family meetings to go over these points until you have agreement. It just won’t work if everyone isn’t on board.
I’d love to hear any of your budgeting tips.
Welcome to Bargain Babe! I’m Mara, and I’m so glad you’re here. I am an obsessive bargain hunter and penny pincher, and I am determined to live a full life without EVER paying full price. 
Bobbi, great “five-pack” of tips. I read a good piece of advice recently re: retirement funding. Something like, “Children do what feels good. Adults make a plan and stick to it.”
Random, impulse, emotional spending is for “children” of any age; real wealth builders do it one purchase at a time with the mindset that you outline.
I would add the best thing my wife and I do is budget for savings and budget less than our take home with the rest going into auto-save. This is my take on budgeting with the top ten things that work for me (http://www.stepawayfromthemall.com/2010/07/starting-budget.html).
@saftm Excellent point! Having an auto-deposit to a savings account is fool proof!
I use Mvelopes.com I’ve got a budget already set up for each paycheck with sub-accounts for everything I can think of that we might need to pay monthly, quarterly or annually. In a few seconds our paychecks are divided out and we know how much money we have to spend. Every few days I sign on and move our debts to the assigned envelope so we always know how much money we have left to spend.
I had a TSA during many of my working years, with savings being automatically deducted from my pay pre-taxes. Now I get a VERY small pension check provided by my late husband’s foresight, and that goes automatically into my savings account to accumulate for emergencies. Thank goodness for that account, as I recently had to replace all sewer pipes under my house and out to the sewer hook-up! YIKES ! ! !