Changing Your Spending Habits Will Be Even Harder

Budgeting isn' t rocket science.

There are no hard and fast rules when creating a budget that works for your family. But, it does take some preparation, consideration and a healthy dose of reality, combined with a willingness to change some unhealthy spending habits. Every family is different. The key is to create a spending plan that fits your income, and that everyone in your household can live with. And so is every budget. Setting stringent spending limits that are impractical or unattainable isn' t going to help get you on the right financial track. A firm commitment to spend less than you make, and save for the more important things in your life is even better.

Being realistic will. Take the time to begin the budget process right: with good planning. Everyone usually has a clear idea of the big bills: mortgage, and groceries, car loans. Here's how: 1: Keep A List of Every Household Expense for One Month. It's the little stuff that can kill a budget. For one month, record every household expense- no matter how small. Before writing out your first set of budget numbers, it's first important to know exactly where your money has been going.

You may be surprised at how much those little conveniences and splurges really add up to. 2: Make A Complete List of Spending Areas. Most people find their spending areas include such things as: mortgage/ rent. Once you see what you' ve been spending your money on, on a regular basis, it's time to make a thorough list of household and personal expense categories. Car loans. Utilities. Insurance premiums. Groceries.

School lunches. Entertainment. Clothes. Include everything! Business expenses, etc. Those school lunches, manicures and even that morning coffee all add up by the end of the month.

Now comes the hard part: add up all of your expenses and compare it to your NET income( this is your take- home pay after taxes, 401K contributions, insurances, etc. ). Don' t forget less regular bills such as annual car insurance premiums, birthday gifts/ parties, holiday outings, summer vacations, field trips, magazine subscriptions, membership dues, and more. 3: Compare Your Expenses To Your Income. Many people make the mistake of thinking that if they make$ 75, 000 a year, they can spend$ 75, 00Wrong! If you' re like most Americans, your expenses may be much higher than your income. You usually only receive about$ 55, 000 to$ 60, 000 after normal payroll deductions. Now what?

Let's get real here: no one can continually spend more money than they make without serious repercussions. It's time to start getting serious. 4: Be Realistic. Eventually you won' t be able to juggle the payments anymore, and something won' t get paid. Now that you' ve had a chance to clearly see where your money is going ever month, it's time to start chipping away at all the waste. You' re walking a slippery slope headed toward financial ruin, and it's time to be realistic. Start big or start small: the decision is yours. That may mean taking your lunch to work twice a week, and coloring your own hair, or it may mean selling your second car and taking the train to work.

The goal is to slash as much frivolous waste as possible from your current spending plan. The severity of the things you' re forced to give up depends on how much overspending leeway you' ve been allowing your family. 5: Together Come Up With A New Spending Plan. List the most important life expenses first: your house or apartment. Once you' ve cut out all of the things you know you can do without, it's time to prioritize your spending list to see what else can go. Food. Car costs.

Health insurance. School fees. As you move further down the list, add entertainment. Etc. Eating out. Summer pool fees. Taking the kids to an amusement park.

You know, all the things you think you need, but may be able to do without. Sure, having a pool in the backyard may be great, but if you both work, and the kids are at summer camp all day, is the cost of its upkeep really worth being in debt? Now, if you' re expenses remain higher than your income, its time to start condensing and cutting from the bottom of this list. Or, would that money be better spent in some other category? If your family is spending more than$ 100 a month eating out, it may be time to reevaluate why you' re not cooking a home. How about fast food? Are your kids involved in too many extracurricular activities, not leaving you the time to cook and eat in?

Now's the time for you to discuss, what is really, as a family important. Or have you just allowed yourselves the luxury of easy dinners so long they now feel like a necessity? If eating out three times a week is more important than going to the movies on Saturdays, or going on that beach vacation, so be it. Just remember, that every expense has an impact on your financial future. That's your choice. Looking at your finances with open eyes and a new attitude won' t be easy.

But, establishing a solid budget, and learning to live within your means may make the difference between a life filled with financial struggles and stress, and a worry- free existence that allows you to spend money on the important things with little or no angst at all. Changing your spending habits will be even harder.