Top Ten Features of a Successful Budget
- Categories that fit your personal situation and your spending habits, not somebody else's.
- Accurate income projections.
- Enough categories to give you a meaningful picture of where your money goes and where you might be able to cut costs, but not so much detail that tracking is a chore that you'll soon tire of.
- Inclusion of expenses that don't occur on a monthly basis, such as auto maintenance, homeowners insurance, personal property taxes, service contracts, etc.
- Regular review of categories to determine if you need more or fewer, review of expenses, and brainstorming about ways to trim costs in each category.
- Cash expenditure tracking and recording.
Cash spending is the biggest leak in most budgets. Cash disappears quickly and if you don't write down everything you spend it on, you'll have a distorted look at your spending.
- A line item for savings so you treat a contribution to your savings account just as you would a bill you owe.
- Realistic written goals. Budgeting isn't about tracking your costs, it's about setting financial goals (saving for a downpayment on a house, buying a new car, getting out of debt, saving for retirement, putting your kids through college, traveling, etc.) and finding ways to meet them. Without goals, your budget is just a pair of handcuffs.
- Identification of spending patterns you may not have been aware of when you weren't tracking your spending.
- Most importantly, internal motivation and a positive attitude!