How to Save Money by Keeping a Budget

Dec 14, 2011
Linda Everett

Save Money with Your Budget - Photographer: nuttakit

The key to saving money by keeping a budget is to stick to that budget. This article explains the importance of following your budget.

Most homemakers understand the basic concept of keeping a monthly budget. However, keeping a budget and sticking to it are two different things. The budget itself is a wonderful planning tool for trying to keep financial limitations under control. On the other hand, sticking to that carefully planned budget is often difficult.

Here are the basic problems that can arise between creating the budget and the actuality of using that budget:

Emergencies happen that can totally wreck a budget.
Little “extras” can run up grocery bills quickly.
Boredom with being responsible can set in, even when you are sticking to the budget.

Here are some tested answers to those normal problems:

Have an emergency fund available for those sudden financial needs.
Stick to a list when you shop for groceries. Plan ahead, use coupons and shop store specials.
Remind yourself of the financial benefits you are receiving by sticking to your budget. Reward yourself with self-satisfaction over your control instead of allowing the lapse to occur. Then get out of the store!

What Should Be Included on My Household Budget?

Some obvious categories include food, shelter and transportation needs for the family. The budget will fail, however, if you neglect to include ordinary “other” categories.

Consider the following list of “optional expenses” you might want to include in your household budget:

Savings fund – start your own “emergency fund” as an option to getting expensive short term loans.
Supplies – stamps, envelopes, paper, printer ink
School needs – money for fund raising projects, clubs or organized sports fees, school supplies, lunch money overages, family “fun” nights
Pet supplies – treats, collars, flea treatment, veterinarian visits, annual vaccinations, license tags
Household replacement items – light bulbs, vacuum bags, paint and other decorating items
Car supplies – insurance payments, car washes, soap, oil, maintenance, emergency fund for larger car-related expenses
Medical expenses – insurance payments, annual check-ups, medicine, dental expenses
Transportation – create a taxi or bus fare fund
Taxes – save up if you expect to owe taxes. Plan for additional expenses for tax on ordinary purchases.
Mailing expenses – shipping fees for sending out occasional packages
Special purchase fund – save up for those point-of-purchase special deals you want to take advantage of.

These are just a few common expenses you should be prepared to spend money on that are not included in your ordinary monthly budgeting plan. These are also the kinds of expenses that can send your budget into “overspending” mode quickly.

Saving Money by Keeping a Budget

The worst thing that can happen if you do not keep a budget is that you take any of several steps to overcome the “emergency” problems and overspending:

You don’t pay a bill on time and incur an expensive late fee.
You have to resort to getting a “payday” loan; more expensive fees and interest charges.
You will lower your credit rating. This will hurt you in the long run later on when you need to get a low interest loan for a major purchase like a house or vehicle.
You are embarrassed, but ask relatives for money and have a hard time repaying them later on.
You are always broke or over budget each month.
You lose peace of mind that comes with having enough money and an emergency fund ready.
Going over budget becomes a habit.

Good Habits Can Help Your Finances

When you replace the bad habit of going over budget month after month with the good habit of being prepared for potential expenses in advance, you will begin to win the battle of personal finances. Saying “no” to unnecessary expenditures can become a habit that will reward you instead of punish you. Do it often enough and you should notice that you are feeling happy and have pride in your ability to say “no” and then walk past the temptations.

Shop with a list and stick to your list.
If an item is not on that list, you either pass it by or determine if it will fit into the cash you have set aside for taking advantage of special deals.
If you do not have that cash available, keep on walking by.
Say no today – there’s always another day and another deal to be had.

Having a budget is an excellent financial tool for getting control over those little expenses that add up to break the budget. In the long run, you will come out financially better off. Remember, you can adjust your budget every month, according to what works for you and your family income. For now, you’re saving money by keeping a budget and sticking to it.