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January 2011

5 Steps to Smart Budgeting

You'll feel a little richer when you commit to a spending plan that reflects who you are.

You'll feel a little richer when you commit to a spending plan that reflects who you are.

Are you one of those people who cringes at the thought of budgeting? Does organizing your expenses and planning your spending feel confining and strict?

Then how about trying a new perspective? Think of a budget as a means to an end, a path to achieving your financial goals. Then follow these tips for creating a realistic and empowering spending plan.

1. Consider Your Strengths: Don’t get pigeonholed into a budget that’s not your style. Are you a planner? You might like a regimented monthly saving plan. A spontaneous sort? Set targets a few months out so you can be more flexible.

2. Determine Your Desires: What would make you feel more content in your financial situation? Consider your family, your health and your dreams. Maybe saving for your future is your goal. Or do you hope to have more cash on hand for getaways and gifts?

3. Make Manageable Changes: Part of developing a plan that will work for you is knowing what’s realistic. For instance, you won’t be able to eliminate essential expenses like your car insurance and prescription costs. However, within those areas, you can explore ways to spend differently. Look for ways you may be able to save on insurance in the Insurance Information Center at 21st.com. Check with your doctor about a generic, lower-cost version of medication.

4. Assess Your Situation: First, put aside your judgment and guilt. Gather your bills and bank statements, and review how you’re currently spending. Use the information to determine how you can make choices that support your goals. If you’re developing a budget with your spouse, this can be the hardest step. Practice focusing on the facts and figures, and removing emotions and opinions.

5. Celebrate Your Success: It feels good to have someone pat you on the back, and you can be your own cheerleader. Be sure to praise your accomplishment when you reach a financial goal. Just don’t reward yourself with items that cost you your hard-earned savings. Think spearmint latte instead of spa treatment.

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