5 Tips: Fixing Your Broken Budget

If you saw yourself in my previous post then this post is for you.  The good news is that budgeting is a journey, not a destination.  We all make mistakes with money from time to time.  My hope is that some of the tips will help you manage your money better.

1) Review your account weekly.  Whether this is done online or in your checkbook it does not matter.  You need to carve out 30 minutes a weekend to make sure every transaction is recorded. 

2) Review your budget at the end of each month.  You need to review how your spending went for the month.  You need to see what categories may need some adjustments.  This is also a time for you to think through the next month about what expenses are coming. 

3) Use envelopes.  I learned this strategy in Dave Ramsey’s Financial Peace University.  You withdraw cash to fund some categories from your budget.  My wife and I use envelopes for our grocery costs.  Once all the envelope is empty you may not spend on that expense until your next paycheck.  Envelopes can also be used for gas and fun money as well.

4) Have a central location for receipts.  Debit and ATM transactions can accumulate.  It is very easy to lose track of these papers and allow your checkbook to be inaccurate.  Having a specific location in your house for this paperwork makes reconciling your checkbook easier.

5) Have an emergency fund.  It would be nice if life went as planned.  The reality is the unexpected will happen.  We had an car alternator problem ($205) this past week.  Having an emergency fund allowed us to not use VISA for this emergency.  I recommend an online savings account such as www.ingdirect.com.  The account set up is simple and it can be linked to your checking account to allow for transfers.

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