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How to Make a Budget that Works for You and Not Against You


A good budget is a critical financial tool. When you develop one that makes sense for you and you stick to it, it is much easier to stay on track with your money. By the same token, though, a poorly-designed budget can undermine your financial goals. Here are four ways to make sure your budget will work for you.

It Covers Essentials First

There’s a general rule that you pay your housing costs first. Whether it’s a mortgage payment or your monthly rent, make sure you deduct that figure from your calculations before building in anything else. Once essentials like your home, your utilities, and food are covered, you have a more realistic figure for what’s available for everything else.

It Squeezes Out Waste

A good budget isn’t just about how you spend money. It’s also about how you don’t spend money. Just $2 wasted each week amounts to $104 in a year, a tidy little sum at year’s end. Budget around things like service charges by getting a free checking account. Pay bills on time so that you avoid late fees. Shop around for a better price on everything you buy.

It Builds an Emergency Fund

The most important financial move for anyone to make is to have an emergency fund in place. That’s what pays the plumber, the mechanic, or the air conditioner repair bill when those unpleasant surprises come along. It’s also how you build some protection against losing a job or even just getting less overtime. Set a timeline in your budget that will accumulate two months’ worth of living expenses, setting it aside for that worst case scenario. Once you’ve set aside a nice reserve, you can let some of that money return to your disposable income–but you may find that you prefer saving it.

It Allows You to Live a Little

Anybody can create a strict budget that maximizes savings and eliminates or prevents debt, but when you are living too strictly, you will find yourself tempted to give up the budget altogether. It’s much better to build an occasional restaurant meal into your plan than to tie yourself down with a budget you’ll hate–and eventually abandon. When your budget lets you enjoy life, you will stick with it. Budgeting is a critical financial skill. After all, if you don’t know where you’re going, you won’t know when you get there. With a well-built budget, you can make the most of your income, meet your expenses, and even have some fun, all while building up a reserve for emergencies. Make a budget that pulls the same direction that you do.

Lizzie Weakley is a freelance writer from Columbus, Ohio. In her free time, she enjoys the outdoors and walks in the park with her three-year-old husky, Snowball.

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