Create a Budget Plan That Actually Works: 3 Steps to Take

With the economy still in recovery mode, and consumers trying to get their finances back on track, having a budget that actually works is more important than ever.

But how do you plan a budget that you'll actually stick to? The key is to understand the different budget strategies and figure out which one is the best fit. It's also vital to realize that this process won't always be easy, but you can't give up.

1. Base Your Income and Expenses on Reality

Start by listing everything you spent money on in the past 3 months. This might take a little bit of extra time, but only writing down expenses and income from one month ago, won't give you the entire picture. You may forget transactions that only happen on a quarterly basis, like getting your car's oil changed, or income bonuses at work.

Be honest with yourself so you don't leave anything out. You want your budget plan to be as accurate as possible, to ensure you actually stick to your monthly spending goals. To do this, you need to base your budget on reality using the correct figures.

2. Chose a Customized Plan

There are multiple types of budgets and spending plans out there, so choosing the right one is important. You may have to test them out for a couple of months to see which type works best for your family. Here are some of the most popular ones:

+ The 50/30/20 rule. This rule breaks down spending habits into 3 categories with certain percentages. Based on your income, essential expenses (like utilities, food and rent) make up 50% of your spending. Unnecessary expenses (cable, internet, cell phone) make up 30% of the budget, and future goals (debt payments, savings, retirement fund) make up the rest, or 20%.
+ Fixed and variable expenses budget. This method divides your budget into two categories, fixed versus variable expenses. You can only lower the payment of fixed expenses, like car insurance, or mortgage payment, so much, but eating out expenses and entertainment fall under discretionary spending, which can be cut back if needed.
+ Bare bones budget. This is a budget based on your lowest possible monthly income. If you're self-employed, or work at a commission-based job, this type of plan will work best for you. Create a plan based on absolute necessities that you need to survive, with any other money seen as gravy.

3. Find a Method to Track Your Budget

Now that you've calculated how much you spend, what your income is, and divided out into a budget plan that works for your specific situation, it's time decide on how you'll track everything each month.

Are you tech-savvy and prefer to track your daily spending on a mobile app? Or do you prefer to carry around a small notepad and pen to quickly jot down transactions? Some of the best options are:

+'s completely free web-based service and mobile app.
+ You Need a Budget's desktop software.
+Microsoft's free monthly budget templates you can easily download.

Again, you may have to test out a few different online tools, or spreadsheet templates, but once you find the one that works, stick with it.

How to Plan a Budget that Works

You're trying to figure how to plan a budget, so be in it for the long-term and don't get discouraged if it doesn't work very well for the first several months. It takes time to create new spending habits, and level out as your income fluctuates.

Also, don't be afraid to experiment and try out a few different methods, tools, and resources to plan a budget. As your situation changes and your life evolves, you may find that one style doesn't work anymore, and it's time to try something new.

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