Starting a budget is harder than it may appear. I’ve tried multiple times and failed as many. A budget takes discipline and there are a bunch of things that can screw it up. Just look at the federal government if you want an example of how hard it is to stick to a budget. If the best political minds in the country can’t budget what hope is there for you and me? Well for one thing we have the power to say “no” and the only person it makes mad is ourselves (and maybe our significant other…which we’ll talk about later). Deep down we know it’s in our best interest to stick to a budget. We can see the results almost immediately. In a few weeks you can start to feel the results of managing your money. Here are the steps to starting a budget.

Make the choice today. Let’s face it, we’re all addicted to easy money. Just like any addict we need to make the choice that we have power over our addiction. No one can make this choice for us. We need to decide that we aren’t going to be controlled by money anymore. We are the masters of our destiny!

Get someone else involved. Just like exercise it always helps to have a partner. You can encourage each other and talk about your progress with each other. Ideally this other person would be your wife, girlfriend, or significant other. If you’re the only one in your relationship trying to manage the money it may not work out the way you’d like it to. Sit down and talk through your ideas on a budget.

Have some historical data to go off. If you have used some personal finance software to track spending you’ll be light years ahead of most people. Use what you know you’ve historically spent in major categories and see if you can cut back in some areas.

Keep an Eye on Your Money Like You Are the Mafia. If something is costing you money send the boys over to bust their knee caps. Not really, but you should be very conscious of where you’re loosing money. When you find somewhere you can improve be the mafia boss and take it out.

Key to Starting a Budget

The key to starting a budget is to first plan for the extra curricular items. These items include 1) Eating Out 2) Toys 3) Entertainment 4) Gifts 5) Travel. Once you’ve nailed down these elements of your budget you can start working on gasoline, big ticket items, and long term saving plans. If you do anything, budget how much you spend on eating out. This one step will set you on a path of financial growth.

Avoiding Pitfalls

Keep Like-Minded People Around You. When I started budgeting it became clear that there are some people I needed to avoid. Just like with other addicts you need to avoid areas where the addicts hang out and stay away from some of your money addicted friends. I’m not saying you should shun your entire social circle but you should try to avoid certain risky situations with some people. Everyone has a friend that loves to eat out, go on shopping sprees, and rupture money like they were bleeding. Try to plan things with them where you’re at least 1 mile away from any credit card machines. Sadly, these people don’t understand what budgeting is all about and will probably want to buy you lunch and anything else you want. I’ve never felt comfortable with this option but if you are your budget will stay in tact and you’ll still get to eat out as much as you want.

Budget for the Unexpected. One of the budget killing events are an unexpected disasters like a major car repair. These types of things can really throw off your momentum and be a wrench in the gears. The best budgets are flexible and can adapt to most changes. But the best solution is to plan ahead for the unexpected parking ticket, repair, or doctor’s bill. Make sure part of your budget goes towards this every paycheck.

Keep it Reasonable Don’t make your budget too restrictive. While you can technically live on rice, beans, and water forever you might need to budget in the nice things in life too. The trick to making a budget work is consistency. Just like the tortoise and the hare it’s the slow and steady budget that wins the race.

The Myth of Credit Card Budgeting
The whole point of credit cards is to spend more than you should today and pay for it later. Until you master your budget you should get rid of the credit cards, pay off the debt, and go to an all cash lifestyle.