One of the steps to good debt management is making a budget, but many people fail to do so or never follow through on the budget they do make. Budgets can be daunting to consider, and once you get one in place, it can seem tedious or even impossible to maintain. Here are three quick tips for getting started with a budget so you can better manage your finances or pay down debt.
First, you must understand the goal of creating a budget. Many people mistakenly think the purpose of a budget is to itemize every single penny that comes in or out of the household, and this is where budgeting becomes impossible for some. While some people can and do effectively budget in this manner, other people track all of their spending with head-splitting detail without ever changing their habits. The goal of a budget is actually to identify habits -- both good and bad -- so you can make and maintain positive changes in how you manage money.
To begin a budget process, consider tracking your spending for a week or a month. The first time you track your spending, you might want to nickel and dime yourself. This helps you have a comprehensive picture of how you handle money. After that first time period of data gathering, you might not consider spending in quite as much detail.
Finally, if total budgeting is getting away from you each month, consider concentrating on problem areas instead. You could track how much you spend on groceries every month, but if you don't plan on making any changes in that regard, it could be wasted time. Instead, choose three categories where you believe you're overspending and concentrate on tracking and managing those. You might choose clothing, dining out or entertainment or gadget spending. Set a budget for those areas and keep it, and use the money you save to pay down debt.
If you are following a budget and still can't make ends meet, there are options for help. Consider speaking with a lawyer about legal options for debt management, including bankruptcy.
Source: Forbes, "7 Tips For Effective And Stress-Free Budgeting," accessed Sep. 30, 2016