Creating a budget: staying within your limit
Published: Tuesday, September 10, 2013
Updated: Tuesday, September 10, 2013 17:09
Last week, I discussed how to break up and categorize your spending habits in order to establish a spending limit for each month. Having that itemized list of groups helps to keep track of where the money is going and enables easier decision-making when having to make the tough choice of figuring out where to cut costs until a reasonable and achievable budget is set.
Actually staying within that budget, however, is a whole different animal with its own set of challenges. First and foremost, in my opinion, is a lack of planning before expenditures. This undoubtedly leads to many surprises, which are rarely pleasant. Take grocery shopping, for example. It is easy to tell yourself, “I have $240 to spend on groceries this month.” It is also easy to then go to that grocery store, walk down the aisles throwing whatever you need in the basket and then proceed to the checkout lane. But what do you do when your total for this week’s food is equal to half of this month’s grocery budget?
Some people like to approach this problem by pausing before picking up any item and then comparing options, searching for that lowest price. That is the obvious solution, but I prefer to make those decisions before I even leave the house. Make a sorted list of items needed and their respective costs. Rough estimates are okay, but give yourself at least a fair understanding on what you can expect to spend on the necessities and avoid that surprise at the end.
Take a moment to look at your grocery store’s web site and note any savings or deals they may be running. If they are advertising a brand you do not recognize for a portion of the price, you have that chance at home to Google the item and do some quick basic research. Finally, if the entire list falls under your budget, enjoy those extra savings or treat yourself to something nice instead of standing in the middle of the store, asking yourself over and over again, “Can I afford these two additional four-packs of Monster Energy?”
When it comes to events with spending that is harder to foresee—such as a night out with friends—I am a big advocate of also setting a firm limit before going out. It is a lot easier to tell yourself “I will only have $20 worth of drinks” at home than at the bar. If you find yourself having trouble sticking to your rules once you are already out, a simple trick is to withdraw the planned amount of cash beforehand and pay for each drink up front rather than running up a tab. Once the cash runs out, you know you are done.
It is understandable that it may not always be easy or convenient to plan every purchase ahead of time, and sometimes unforeseen expenditures may rise up nevertheless. The more you reduce those unknowns, however, the easier it will get to stay within that budget and deal with the surprises as they come. With time and practice, you can let this healthy habit become second nature.