A 2013 Gallup poll found only 30% of American households prepare a detailed household budget (source). While budgeting can feel daunting at first, it can make a tremendous difference on your path to long-term financial success. With that in mind, here are 10 useful tips for budgeting.

10. Start with the Big 3

When building your budget, it’s important to look at your largest expenses first. For most people those are food, housing and transportation. Make sure to account for all aspects of your Big 3 from groceries to eating out and car payments to fuel costs. Starting with your largest expenses first will help you to get a more accurate view of what’s left to play with in your budget.

9. Bring Your Lunch

It seems so simple, but it’s amazing how much you can save in your budget by packing a lunch every day. In her article, “Buying Your Lunch Is A Terrible Idea. The End. No More Debates” (source), Jillian Berman figured she saves over $1,500.00 per year by bringing her lunch to work. If you are a household, multiply the savings for each person who packs a lunch. It adds up! Plus, you have the added benefit of controlling your portions and making healthier choices.

8. Shop Alone

Sometimes when we go shopping with a friend, we are tempted to buy items we don’t need. Or think about going to the grocery store with kids in tow. How often are items added to the cart based on their requests? Shopping alone may not be as fun, but it can help to control unnecessary purchases and keep you on budget.

7. Look at the Year, Not Just the Month

“Budgeting for the year is better largely because we feel less confident in our estimates, so add more of a buffer for unexpected expenses, according to University of Southern California’s Gulden Ulkumen, Cornell’s Manoj Thomas, and New York University’s Vicki Morwitz.” (source) Looking at a single month doesn’t account for holiday expenses, vacations, etc. Taking a longer view can help budgets be more accurate.

6. Start a Spending Diary

When starting a diet, people are often asked to track what they eat. The same idea applies to starting a budget. Your diary can be as simple as a small notepad or a note on your smartphone. Start with a week and write down everything you spend. After you analyze your first week, try to continue for the whole month to get a good view of your spending habits. Do you eat out more than you thought? Did you spend less on gas than you expected? Use the information to make adjustments to your budget.

5. Earn Extra Money

Bringing in more income doesn’t mean picking up another job. Rather, aggressively paying down debt such as credit cards, mortgages and student loans will free up more of your cash flow for other line items. If possible, avoid making minimum payments and consider adding an additional payment occasionally to help pay down your principal. Adding more money to your budget can be as simple as smart debt payment strategies.

4. Use Separate Accounts

Instead of having a single checking and savings account, consider opening multiple accounts for varied purposes. For example, create an emergency account and set up your checking account to automatically transfer funds each time you receive a pay check. Then create an account just for ‘fun savings.’ Add to your fun savings only when you have extra funds. Using separate accounts can help prevent spending just because the money is there.

3. Don’t Count Dollars until They Are There

Sure, you usually get a pretty hefty year-end bonus, but what if this is the year you don’t? Counting money based on what you expect to come in can be one of the easiest ways to blow your budget. Focus on the income you know is coming in, then if you receive extra, have a plan in place to use it wisely.

2. Save Room for Fun

As you plan your budget, make room for fun. Allowing yourself room for special treats or nights out can make all the difference in keeping you on track to achieve your goals. Be sure you are specific with your fun expenses as you plan your budget and stick to your allotment.

1. Don’t Give Up

Budgeting isn’t fun for most of us, but it can make all the difference in achieving our financial goals. Stick to it and it will get easier with time. Meet with a financial planner to discuss your long-term goals and gain even more encouragement to stay the course.

What other tips would you add to the list? Share them with us below!

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