Starting a budget can be a fun and exciting way to get your finances in order. Budgeting can be a tool to help you discover bad spending habits, as well as create smart new ones.

HABIT ONE: Set a goal
Decide why you are going to start a budget. Do you want to pay off bills? Do you want to save for the holidays or a family vacation? Once you decide, starting a plan and knowing how to save will be easier. Decide on an amount you would like to save and the date you would like to have the money available. If you are saving for a family vacation, plan well ahead for such needs as an early deposit on a cabin or airline tickets.

HABIT TWO: Write everything down
Writing everything down can be tedious, even overwhelming. However, when you write down each transaction, you will begin to see patterns in your spending habits. For example, getting coffee every day will add up over time, and you will be able to see where your money is going and how fast it is being depleted.

HABIT THREE: Control how you spend
Are you eating out too often? Plan to eat out once or twice a month, and only spend a portion of what you spent in the past on one meal for your family. Can you carpool to work? Saving money on gas is an excellent way to get ahead financially. When you look through your checkbook and see where the money has gone and what you can cut out of your spending, you will start to see your savings account grow.

HABIT FOUR: Create a plan
Determine fixed expenses that you have each month. The monthly mortgage, car payment, insurance, taxes, utility bills, entertainment, grocery shopping, and more will be static. You can plan on what amounts will be deducted each month. Then you can add other expenses into your budget that don’t necessarily stay the same each month. Once you know your expenses, you can plan for other items in your budget.

HABIT FIVE: Plan and save
It’s inevitable: your car will break down, your air conditioner will go out in the middle of summer, or some other emergency will pop up when you least expect it. Set aside money each month for situations that arise throughout the year, so you will be prepared when an incident occurs. If you have money set aside for such occasions, you won’t have to tap into your credit cards and fall back into debt. Planning can go a long way when it comes to special needs for money. If you can go the entire year without an incident, keep that money aside for future purchases.

Setting goals and creating healthy financial habits will help you stay ahead and prepare for whatever comes. Having money in your pocket and money saved at your financial institution will give you confidence and allow you to live without financial worry. In addition, creating smart budgeting habits will help you learn what you need and keep you from spending money on things you don’t.

For additional financial articles, check out our financial fitness resources. Questions? Call 503-588-0211.