how to create a budget and actually follow it

[codeman]

hey everyone

so, this sounds dumb lol
but how do i create a budget and stick to it?

like, how much should i be paying for rent? is there a percentage of income?
basically i live on my own, just me. after my bills (rent, phone, car, insurance) I have about 1300. I want to get a 1 bedroom apartment and i know thats about 1100. (Currently pay 600)
Is that reasonable? I know its a ton of money for rent but its southern california, and it will be closer to my job.

next how the hell do i actually save? how can i force myself to do it? If its in my account its gets spent, no matter what the amount, and thats got to stop.

thanks for reading any advice is appreciated.

[doingitallwrong]

That's kind of like asking how to create a diet and stick to it. You just gotta do it!

I believe 'they' say housing should be around 25-30% of your net pay (but I also believe that's a pretty arbitrary number and depends on loads of individual factors).

If you had $800 per month after your listed bills are paid, could you manage? How much are your groceries each month? Cable/Internet? Any utilities? Gas? Clothing? Are you contributing to a 401(k) at work, and if so how much and is there a company match? And so on.

If you do most of your banking online, you might look into something like www.Mint.com that will track and categorize your expenses, which is the basic beginning of a budget. (You can use it even if you don't do online banking, but Mint will automatically access your online accounts so everything is kept up to date without you having to manually enter it all.)

As far as saving -- again, just do it! -- but if you have the option of direct deposit, then once you figure out how much you can set aside each month, have that amount directly deposited into a savings account. If you don't see it, you won't miss it. (Out of sight, out of mind, right?) Preferably at a separate bank from your checking account, so that it's not easy to 'sweep' the money into the checking, and possibly even in an online account so that it takes 2-3 days to get the funds.

If you itemize all of your expenses, there are lots of folks here who would help you both set up a budget and determine where you can scale back to increase your saving potential.

[George707]

hey there.

My top tip for the lazy saver is switch to cash only for every purchase possible. I run a weekly budget that is an allowance after all my fixed costs and savings targets have been put aside. Thats all the thought is requires. Once the wallet is empty its beans on toast until the next 'pay day'

[krantcents]

Start with a compelling reason! I use savings as my driving force and everything else must fit with that goal. I have been doing that way for over 40 years and it works for me. Find your compelling reason and everything will fall into place for you. BTW, I live in southern California too.

[johnt78]

Budgeting lies at the foundation of every financial plan. It doesn’t matter if you’re living paycheck to paycheck or earning six-figures a year, you need to know where your money is going if you want to have a handle on your finances. Unlike what you might believe, budgeting isn’t all about restricting what you spend money on and cutting out all the fun in your life. It’s really about understanding how much money you have, where it goes, and then planning how to best allocate those funds.

[snafu]

As stated mint.com is a terrific tool if you're willing to step up and just do it week in and week out. Best way to save money is to Pay Yourself First. Set up a saving account and automatically transfer a set amount each and every pay. I suggest 15 % of net. The rule of thumb is 50% Needs, 30% Wants and 20% Savings. Rent, utilities and parking ideally don't exceed 25-28%. Are you currently a roomie in a share? Since you're in a HCOL [high cost of living] area, why not compromise with a studio apartment? Less stuff to look after. I presume you know it's damage deposit, 1st and often last month's rent in advance. Most landlords check your credit rating. Do you know your FICO score? If utilities are not currently in your name, you may need to pay a deposit over and above monthly fees.

You'll need saving to outfit an apartment. What items are you missing? Deciding how much you can spend on needs and wants and sticking to the plan is just part of being an adult. We want you to manage your money because it's very frustrating when your money manages you and limits your options.

[frankdcowell]

My advice is reducing your interest not only helps to reduce your expenses but also increases your income.And if you are able to find some assets that can help you get a secured loan, you'll be able to spread out your payment over a longer period of time and you will likely qualify for a lower interest rate because you have some security to offer the lending institution to back up the loan.Hope this helps

[JasonSimms]

Making budgets only make sense if you stick to them too. I write down my expenses and earning on a single sheet of paper and try and strike a balance. For me the saving part is most critical so that I am not taken by surprise.

[mrpaseo]

Sorry, I did not read all the posts but you almost answered your own question with the last line that you wrote, "If its in my account its gets spent, no matter what the amount, and that's got to stop."

This is a common problem, your first step would be to set up a second account and divert your savings to that account. Some people need to have the account in a different bank, I know one person that had the second account in a different bank two cities away with no ATM access... You got to do what you got to do to ensure your money is saved. If you do not have the discipline to watch your money grow, then you need to take action to make yourself do it.

I keep a zero based budget and I have multiple fail safes to stop me from touching my investment money and my emergency fund.

Set up some steps.
My budget includes:
1. Slush fund (Usually less than $100)
2. His and Her allowance (Usually $300 each)
3. Entertainment Money ($50 per weekend)
4. Mini E-Fund (Usually $500 that is in the bank and easily accessible)
5. Main E-Fund (Saved in three different bank accounts, usually less than $10k)

You don't need all of these, use some of them or make up a few of your own. This took many years to get like this though so take one step at a time and take action!

[marvholly]

Setting up a budget is easy. Review all your checks, cc bills and debit purchases for 3-6 months. See what can logically be changed or lowered (internet, home phone, cell phone, insurance, entertainment......) without a MAJOR lifestyle change. Determine where you ARE willing to make lifestyle changes (going out less, buying less clothing, not having the latest electronic gadget.......). move that $$ to savings.

WRITE down your budget. Being CHEAP I use excel. Move any/all excess money to a savings account. Enter EVERTHING as you spend it. Adjust the budget as needed BUT be sure to save for retirement & an emergency fund (pay yourself first).

Start cookiung at home more. Batch cook with sale foods, in season fruits & veg & coupons.

[GeorgetteSpurling]

It is not about only creating a budge, it is also about following it properly. First of all, know all the basics of budgeting. Know the reason why your previous budget was not working, maybe you are underestimating your expenses etc.

[YolandoAmaya]

It is important to follow budget after creating. You need to predict your expenses in a right manner. Then make a budget firstly focus on things according to their preference.

[UDRogue]

When I first came here people recommended either mint.com or You Need A Budget (YNAB). Mint is free but I didn't want to give them my passwords to all my accounts. YNAB cost $60 but that's it, no monthly subscription and they have a great support system with videos and email classes and a forum. I went with YNAB and it's changed me completely. It's given me a clear perspective of our budget.

One of the problems I see with you going up on your rent is you might not realize how much the occasional bills hit you. The ones that are due only once a year or if an appliance breaks or an unexpected car repair. The YNAB program makes you go ahead and budget a little every month for each of those unexpected things. It took me a few weeks to learn the program but was well worth it, now it is so EASY for me to plan for those things and see into the future whether I will be able to afford them.

If your expenditures are pretty simple you might not need a software program like that but for me, I wish I'd had it when I was young and things were simple or I would not be in the debt I am today.

PS, I made back the $60 cost for YNAB within a month because of how it made me see my spending and cut back quickly.

[JohnM.Hendricks]

7 steps for a successful budget
1. Track spending for a month.
2. Put savings on autopilot.
3. Prioritize spending.
4. Use cash for daily spending.
5. Tackle credit card debt.
6. Build emergency savings account.
7. ways to live within your means.

[RudolfLesko]

It is not about only creating a budget plan, the main task is about following it. You need to predict your monthly budget. You need to keep all the information about where your money is going, you can also input some values from last months, input your expected income and subtract your costs to make a good budget.