For those who still like to stick to investing, this article is definitely not for you because I am going to discuss few important tips on budgeting. Probably there are millions of methods of budgeting available on the web. And there are millions of formulas. However, you don’t really have to master all of them. In fact, you don’t have to consider even one because the basics are quite simple. And if you know the basics I don’t think you really need any methods or formulas.

First thing you need to do is determine the amount you pay on your bills. This will take some time. Hence, I would ask you to do this on a holiday. Sit down and go through all your bills. Jot down what and how much do you pay every month. Which are recurring and which are one-time costs. While doing this, I am sure you will be surprised how much you spend – or rather waste – every month.

After you determine a monthly amount, look closer and find out what is your weekly cost of living. This would include utilities, gas, groceries, etc. Don’t bother to get an exact amount. Just an approximate one. Now, think about additional expenses, money spent on entertainment.

Once you have a proper idea of your expense and spending habits, it’s time to start off with a simple budget. Again, you don’t really need a formula or great tips on budgeting. It’s this simple: Jot down what your net salary is. Take a small amount as your saving. Then, assign amounts to your necessities first and entertainment later. However, make sure this amount is less than what it was earlier (in the bills).

First month, it would be quite difficult as you aren’t habituated to a budget and frugal living. However, once you get the feel, start reducing the amount assigned to each category and gradually increase the savings. Living with a budget isn’t difficult if you are disciplined and dedicated. Also, don’t try to push too hard to repay all your debts at once. It’s a slow and gradual process. Instead of adopting a quick change, try to adopt a behavioral change.

Unlike investments, if you live with a budget, no global crisis or any type of credit crunch can affect you way of living. Try to start today with these simple tips on budgeting and achieve financial immunity.

Personal Budgeting Myth #1

Budgeting is suffering

And how is that? In fact, you are always on a budget, whether or not you have planned it. However, the current budget is not saving you any dollars and not helping you in any way. Budget isn’t suffering. In fact, it is an end to your suffering as it helps you to avoid being buried under debts, save for more important things, and be independent.

Personal Budgeting Myth #2

Budgets are for poor people

This is another misconception people have. They believe budgets are adopted by people who are facing some financial problems or essentially poor people. It is farthest from truth. Budgets are for everyone. Even the richest person on earth has a budget.

Personal Budgeting Myth #3

Budgeting involves lot of paperwork and wastes time

This is more of a fear than a myth. People generally don’t like spending a few minutes towards their budget. With time, this laziness turns into fear. And to be precise, it isn’t waste of time, it is an investment.

Personal Budgeting Myth #4

Budget will deprive you

Budget doesn’t mean spending very little or making oneself feel guilty of every purchase. The main purpose of having a budget is trying to save little every month. And this doesn’t necessarily mean being deprived.

Personal Budgeting Myth #5

I don’t need a budget for my survival

You don’t need a spouse as well for your survival. And many other things except food, water, and air. Would you give up everything? And budget isn’t as difficult as you think. Once you get started, it’s very simple to go on. And you will start liking it as soon as you see your money is being saved. Hence, only the start is difficult.

Budgets would never harm people. All it will endow you with is benefit, financial benefit.

Planning

An effective budget is an outcome of efficient planning. Hence, it’s very important to plan how’s, what’s, and why’s of your budget. A budget cannot be made in an instant. An individual has to first analyze several things like income sources and amount, daily expenditures, recurring costs, etc. Keeping all these things in mind an outlay of budget is created, which is finalized after few trials.

Set Priority

Budgeting is all about prioritizing. Single mothers must ensure that their basic and important needs are taken care of and well planned in the budget. A plan that prevents an individual from the most important things isn’t a budget. Things like proper diet for her children, proper education, utility bills, etc., must be necessarily included in the budget. These things should always come first before other things.

‘The envelope method’

Financially smart individuals use envelopes to manage their finances. Their paycheck is divided into various categories like utility bills, food, grocery, shopping, etc. and the money required to manage these expenses goes directly into the respective envelopes. Money spent to pay electricity bill must be taken out from ‘utility’ envelope and funds to purchase clothes must be withdrawn from ‘shopping’ envelope. If money in the envelope proves to be insufficient, probably you need to revise your budget. However, make sure you don’t take out money from an envelope for expenses other than what is assigned to the individual.

Savings

Your budget must necessarily involve saving every month. Being the only parent of your child, it’s important to have some money for emergency matters. If you don’t encounter any emergencies, remember your child will need money for his/her future. You can start will as low as $10 every month. However, make sure you try to increase the amount every month and use it only during emergencies. This is one of the most important budgeting tips for single mothers.

Do not delay

Procrastination restricts budgeting. And the more you delay, the more you will feel like delaying. And it goes on. Hence, plan and design your budget today without any procrastination.

These budgeting tips might help you to create an effective budget, if not a perfect one. However, having a budget is more important.

However, not many people are used to this kind of spending. Personal finance budgeting is quite alien to people in their 20’s, and very few people in their 30’s actually have an effective budget. So, let’s have a look at how people can start with budgeting and from where.

1. Shopping budget
   Creating a shopping budget means cutting down on excessive shopping. However, you can’t spend more on trivial things and ignore significant things. Hence, to create shopping budget, you will have to think about things that you can eliminate. Or you can buy a cheaper budget, or find discounts. However, eventually, monthly shopping must be done with the amount assigned by you.
2. Household Budget
   There are hundred of things you will need in your house. However, if you look at it closely, there are many things that aren’t really useful. Get rid of them. Next, create a list of various kinds of bills you pay every month and think about ways to eliminate or reduce the usage. Food is important to survive; however, junk food is not. Cut down money spent on eating out. Use energy saving lights, switch to a cheaper substitute. Do every possible thing but reduce the amount spent on household every month.
3. Credit Card Budget
   Along with spending less on your credit card, it is important to repay the debt accumulated by it. Hence, spending less ensure repaying less amount. The first thing you can do is get rid of all your cards except one. More available balance encourages more spending.
4. Mortgage Management
   Have a close look at the conditions and interest rates of the mortgage provided by the financial institution. Check if they are providing the best deal for you. If not, switch your mortgage provider and select the one that offers the best deal in the market. It’s just a phone call away.
5. Auto Finance Budget
   To start with personal finance budgeting, you can have a look at your vehicle expenses. People usually don’t realize how much amount they spend on their vehicles. Gas is definitely a huge monthly expense. However, many other costs like maintenance, repairs, etc sum up a huge amount. You can reduce this cost either by traveling less by your car by using public transport or carpooling, or by getting rid of your car.

You can probably save a huge amount every month by personal finance budgeting. However, it needs discipline and dedication to succeed.

To save huge amount, you definitely need something better than a conservative budget. Here are three key points you must avoid while planning your budget.

1. Greater Focus on Trivial Expenditures

   Carry meal at your workplace. Cut down in consumption of desserts. Fewer bottles of beer every week. Great! You are now working according to your budget and probably saving some amount every day. But are these cut in expenses assembling a huge amount? Is it making any difference in your lifestyle except for less calorie consumption everyday? Is this your goal?

   No, it’s not. Meeting your friend in café once in a weekend or having occasional desserts is not what’s keeping you from achieving bigger savings. This $5 saving every week is not going to help you pay back your mortgage. So what is it that you are required to do?

   Focus on the amount, regularity, and timing of your bigger expenses like a new vehicle or a new home. If you actually want to save some real amount, work on this section of your expenditures. Is it possible to holdup purchasing a new car for some more months? Even better, get a used vehicle instead. Rather than the new house you have decided to buy, is it possible to opt for a smaller house?

   Rather than cutting down expenses on your food, try to search ways where you can cut down interest rates. Before spending any big amount, stop. Rethink about the item. Can you pick a substitute for it? Or is it that necessary to buy right now? These choices can definitely help you save more rather than money earned by dieting for decades.

2. Just Not Flexible Enough

   How many methods of budgeting are you aware about? Which method do you use for your budgeting? You are saving ‘X’ amount every month and suddenly a friend of yours comes up with a new method of budgeting which can save ‘Y’ amount. Hurray! You are no more a conservative budgeting individual because you have now adopted a new way to save money.

   Here is the problem. You keep searching for new techniques every day when the only important thing to understand is ‘spend on the important, forget the rest.’ You don’t require any method to save dollars.

   Why no methods? Because none of your methods are as simple as this one. Here is an example. In the last week of this month, according to your some strange method, you have $30 left in your entertainment category and none in the dining category. Next day, a friend turns up and asks you for a dinner, you tell him, “I am sorry William. I won’t be able to afford a dinner this month, let’s go for a movie instead.” You are definitely not getting the point of budgeting.

   Don’t let some creepy method of budgeting control your priorities of life. Check what’s important for you and spend accordingly.

3. Unable to see the goal

   Set a goal such as “I will save $25 every week,” or “I will invest $300 every month in the XYZ Investment Plan.” Have a goal in your mind before you begin planning your budget each month.

   It’s important to know where you are heading to reach where you are heading. Here is a simpler one. You are 20 miles away from your house at midnight. The streets are dark without any street lights and your vehicle’s headlights aren’t working either. Is it possible to drive to your place within an hour? Impossible. Chances are you might spend a night in the grass fields along with some big horn sheep. This is definitely not what you want in your financial journey.

   No budgets are useful unless they have a target or a goal. Set a definite budget and let yourself know where you want to go. This way you can measure your progress or shortcomings.

   At the end of the month, if you are able to save 20% of your salary, no one will bother about how you spent your other 80%.

• Buy Gifts Only For People Who Matter

  This might look unethical to you, but why do you want to buy gifts for all relatives and friends, instead of a chosen few who matter to you? The others just accept gifts and forget you the next moment!

• Estimate the Amount of Money you’d want To Spend On Each Person

  Many budgeters ask you to allot a whole chunk of money for buying gifts, but most often with such a thing, you cross limits as you tend to spend more on some people. Based on how much you value your relationship with a person, decide upon the amount of money you are going to spend on him/her. If you can, go and ask that person what he/she would like to have and then make the budget. But here you run the risk of being demanded a thing that is more expensive than your budget permits.

• Be on the lookout for sales

  Don’t go by the popular concept of finishing off all shopping at one go and getting over with the responsibility of festive shopping. It doesn’t matter if you have to visit the mall once again, but just wait for a sale.

• Be on the lookout for discounts and buy online

  Don’t forget to explicitly ask for discounts at the stores. Don’t assume that you don’t qualify, just ask. Also online buying as from Amazon and EBay are sure going to keep your wallets happy as these online stores offer coupons or discounts that mostly real world stores don’t offer. Lastly, make as many payments as possible with cash. That will fetch you things at lower rates.

• Don’t be impulsive while shopping, don’t fall for unnecessary warranties and shop alone

  When you reach the marketplace, the slick new look of commodities will tempt you to buy them. Later on you’ll realize that you’ve actually spent much more than what you’ve planned for. When I go shopping I always decide beforehand what I’m going to buy and buy just that and come back home. So my spending does not cross my estimated amount.

Most often, budgeting is not at all difficult. A bit of planning and clever thinking creates magic.

• Low flow toilets to save on water bill: Normally, your flush would use about 13 liters of water per day. But a low flush toilet will use only 6 liters. That saves up on more than half your water expenditure.
• Filter water bottles in place of normal packaged water: You might be buying dozens of packaged water bottles to quench your thirst when out of home. These bottles only add up to the disposable plastic that goes to your bin. Also you spend a lot of money on every new purchase that you make. Instead, use a bottle with built-in filters. Fill up the bottle with any drinking water tap and the filters will purify the water for you. This is a cheaper, more convenient and eco-friendly option for you.
• Use a coin sorting machine in place of Coinstar: If you’ve saved money in coins, you might manually count the coins or employ Coinstar to do it for you. In the former case, you spend a lot of time and effort in counting the money and in the latter case you pay 10 % of the change for the services. Now you can avoid both by using a coin sorting machine which will count your change for you.
• Use a electricity meter to measure the usage: Every electrical household appliance uses a lot of electricity unnoticed. If you measure the consumption along with the charges you’ll amazed to find how much of electricity your television, freezer, computer, washing machine and geyser are consuming. You can measure the consumption rate of each and every gadget so that you can identify the ones that are consuming the maximum energy. Don’t forget to use the meter to budget your expenses.
• Use high efficiency power supply for minimum power consumption: An electricity meter might just measure the amount of electricity your gadgets consume per day but you can never do anything to lessen the consumption. High efficiency power supply machines regulate the flow of electrical supply to your gadgets so that they consume minimum amount of power.
• Use high efficiency gadgets: High efficiency gadgets, though a tad expensive are better than the cheaper ones in the long run as they consume less electrical energy. They save up on the consumption of water too which slashes your water bill which can be quite a bit over a period of time.

When it comes to house lighting, do it with the compact fluorescent bulbs rather than the conventional because you’ll be saving a lot of money spent on energy consumption. Program the number of times and the temperature at which your air conditioner should run in a day, so that you don’t leave it on accidentally.

Power efficient shower heads and space heaters are going to add on to the gadgets that you would want to use to budget your household expenses.