4 Secrets to Successful Budgeting

4 Secrets to Successful Budgeting

The key to financial success, whether for an individual, family or a business, has always involved an effective budgeting plan. Every decision is driven by goals and priorities, and discipline. When done effectively, budgeting helps families and businesses achieve their most important financial objectives. The principles are universal and can be applied easily through an organized and disciplined approach to everyday budgeting:

1. Pay yourself first

You’ve heard it before, but have you practiced it? After setting up all of your budget needs, the first item on the payment list is your savings account. The rest of your expenses are budgeted after a fixed dollar amount goes to savings.

2. Pay off debt

You need to pay yourself first, but, if you can reduce your debt burden, you will then be able to pay yourself more. Set a debt reduction goal along with your saving goal. As your debt is reduced you can increase the amount you pay yourself each month.

3. Don’t deviate

If you find your budget out of whack due to an unplanned (or impulsive) expenditure, find an item or two on the budget that can be cut next month. You need to stay on track to a cash flow goal.

4. Establish benchmarks and incentives

Your budget goal should include timed benchmarks that show you are on track. If your goal is to increase your excess cash flow by $300 in three months, and you achieve it, reward yourself with a “forbidden” expenditure like a night out, a massage, or a new electronic you've had your eye on.