What gets measured, gets done. This is the philosophy of implementing a budget and holding yourself and others in your household accountable for the monetary decisions that impact your financial security. Every effective organization functions under a transparent budget process.  In order to incorporate new spending habits, you will need to discover the habits that you currently have. The most effective method to reveal your spending habits is to record what you spend and what you are purchasing. You can record this financial information in a spiral notebook, ledger, lined journal or notebook. This important strategy will illuminate what you need to spend and also your unnecessary spending. With this knowledge, you will be able to build a better budget based upon your needs and then implement controls for all unnecessary spending. You will gain power over your financial life and begin to truly transform your financial future.

The first step is to develop a routine for recording the money you spend. I like to have a “morning meeting” with my husband during our coffee time. We record our expenditures for the previous day and then discuss the upcoming “needs.”  We set short range goals and celebrations as well as our long range goals and celebrations. We work together to monitor our “needs” spending as well as our habitual spending on unnecessary items. This accountability partnership works to ensure we are both adhering to our goals and objectives. What we discovered in our process, was that we truly spent money as a form of entertainment and received very little satisfaction from the actual spending. My epiphany was that I actually enjoyed saving money rather than spending and that my spending was a form of avoidance of taking control of other aspects of my life in which I felt overwhelmed. After the lessons I learned, I became a better steward of my financial resources and began to view money in a new way. Although I had considered myself a thrifty person, I spent money in little ways that added up to major bad spending habits. Now, I am financially focused to paying off my debts and increasing my savings, retirement and quality of life without feeling deprived. What a sense of freedom and how invigorating it is to have a fresh start on my financial security. No matter how overwhelmed you feel, you can gain control, focus and power over your fiscal life. Now that is transformational!

After developing your recording routine, begin to plan out what you actually need in the way of expenses. Food, utilities, mortgage, insurance, savings, gas, clothing and other necessities. Make a list of all the necessary bills and expenses for the month. Average your utility bills and consider the seasonal demands to predict that you will need to spend for the month. Anticipate as many expenses as you can and write these in your record book. Also, try to save 10% of your paycheck. If that is not possible right now, plan on 5%, 4% or 3% until you can pay off debt and save more. The important point here is habit building to save money. Before you spend a penny, you will need to deposit this percentage in a savings account with no debit or checking feature. This is “no touch” money. This will be the foundation of your financial future. This was extremely difficult for me to do. I promised myself that I wouldn’t even look at this money for 5 years to reduce my temptation to access this money. After 5 years, I had enough to invest the money (it really wasn’t that much) but I wanted it to grow instead of spending it. After 10 years, I have saved over 30,000 dollars and I didn’t even miss it in my budget. What this illuminated for me was that even saving a little added up to big money. By the same measure, even spending a little added up to big money. That changed my entire philosophy of money.

Back to the budget:

Now that you have your expenses calculated, you can begin to plan how to use the remaining money in your budget. If your margin of capital is tight, you have discovered that you are living at the limit of your means. Your goal is to live well within your means with extra to spare. The more extra you have, the more secure you will be. There will be some temporary sacrifices but the end result is well worth the slight amount of discomfort you may experience. When you plan how to spend your money, you become more aware of your financial resources and are then in a position to become a better steward of your capital and your security.

Your priorities are saving money, eliminating debt and creating better spending habits to gain control over your fiscal future. To accomplish this, you need to set weekly or biweekly goals scaffolded according to your paydays. When you meet your goals, implement some small,meaningful celebrations to provide the positive reinforcement to adhere to the strategies.

At the end of each pay period, any money that is left over should be split between and emergency saving account and paying off debt. The emergency savings account is there to provide a cushion for major unexpected occurrences. The rest of the money is to reduce your debt so that you eventually, you will have more financial freedom to achieve all your life’s goals and ambitions.

Another successful strategy is to carefully look at your budget and predicted expenses and determine how you can reduce the expenses. Look at your utility bills: how can you reduce these. Here are some suggestions for reducing these bills:

• Turn off lights as you leave each room
• Don’t leave any unnecessary electrical items on
• Determine the energy vampires in your home and eliminate them
• Set your thermostat to a comfortable but not excessive temperature
• Dress in layers to permit adjustments in your thermostat
• Use what you have first before buying more
• Make the most of what you have
• Find alternate forms of recreation that don’t cost money (Redbox/Netflix instead of movies at the theater)
• Don’t waste resources
• Everything is a resource
• Plan your errands to save on gas
• Have pre-planned snacks ready in the refrigerator or pantry instead of purchasing fast food or convenience items. Take these healthy snacks in a lunch box when running errands.
• Make a menu and a shopping list
• Use coupons
• Install a clothes line: you will be surprised at how fresh your clothing is
• Hang out clothing that needs to be dry cleaned and wear a few times before dry cleaning or dryclean at home with an at home dry cleaning kit.

Now that you have a framework for a budget, keep recording your expenditures and analyzing these data. You will learn where you can trim more expenses and secure your financial future.