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How to Set Up a Budget You Will Actually Follow

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I was researching how much the average American saved a year for this article and to be honest, it is a hard statistic to find. There is no hard and fast resource that says the average American saves XX dollars per year towards emergencies or their retirement. What I did find, however, was some shocking estimates; estimates that tell us that on average, less than $400 a year is saved!

Now, of course, this is in the banking system and does not account for those that prefer to keep their money at home or in commodities but it does tell a story. We are in a world of hurt! Where is the savings of the American people going? At one time we were a nation of savers. Now – not so much.

Are we spending it on treats, coffees, excessive bills, eating out? Are we paying for pleasure now – immediate gratification – instead of saving for the future or an emergency?

All of these can be a huge yes! I do think what most people do not recognize is that you can become a saver – even if you have not been able to before – by simply creating a budget and learning to stick to it. I think most people know that setting a budget is the only smart way to identify the problem areas and taking steps to change. Yes, it can be tough but so is being broke!

Setting up a budget that you can follow is relatively simple by following these steps.


1) Start writing down all of your expenses and saving every receipt for everything you buy. Do this for 2 months.
2) Once this has been completed, start listing out your monthly expenses for rent, mortgage, utilities, food and other necessities on a spreadsheet. Also add yearly expenses such as homeowners insurance and property taxes. Having these in a monthly dollar amount will help.
3) List out your extra expenses, such as eating out, activities and special expenses.
4) Tally your columns for hard expenses and your extra expenses.
5) Add a line for your income and evaluate the differences.
6) Start eliminating the excess expenses and commit to putting that money into savings each month.
7) Once excess expenses are eliminated, start paring down higher expenses in your hard monthly expense line. Common areas for savings would be cell phone bills, cable and movie bills, high food costs. Once areas are reduced, commit those additional monies into savings.
8) Continue to save receipts and track every expense to gain true control over your money. Knowing where you are financially is freeing.

Writing and sticking to your budget is a work in progress. I think many people are shocked when they track how much is spent eating out 2-3 times a week – money that can be otherwise saved or used to pay off a high credit card.

You can become a saver and stop throwing money down the drain by using these simple tips for how to set up a budget you will actually follow. If you are terrible at managing money, have someone help you or work with you to keep you on track. It is worth it in the long run.

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