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It should be no surprise that one of the best tips for effective spending management is to stick to a budget plan. Many people don't like to apply the discipline it takes to adhere to a budget and wish there was a better way. Yet, following a plan can help you have money for what you really want rather than wasting it through bad spending habits. Budgeting and tracking personal spending is really the best way to reach your financial goals.
Rather than thinking of budgeting as a negative restriction, try to see it as a positive one. Good spending management is simply the way you choose to use your own money and a plan can help you do that. Without a budget, it's easy for most people to spend much more money each month than they think they're spending. Budgeting for essentials such as groceries can leave you more cash to have for meals out. You can also often eat healthier by avoiding overspending on fast foods and snacks.
Whereas your monthly housing costs, such as rent or mortgage and utilities, are considered fixed expenses, the amount you need to spend on groceries can be taken from some of the income that remains. Other fixed costs include regular bills. In addition to groceries, income not going to fixed expenses should be categorized into transportation, clothing or other specific categories you'll use for your personal spending management plan. It's always a good idea, if possible, to add an extra 10% to the amount budgeted since most people underestimate their spending.
While those on lower incomes find it especially difficult to save any money each month, it's a crucial step in good spending management. Even a few dollars stashed away each week or paycheck can create an emergency savings account. If your income increases, so should the percentage that you add to your weekly or monthly emergency savings.
Although it takes patience and discipline, tracking your spending is something you should do regularly. Doing this can make the difference between staying within your budget and exercising poor spending management. The great thing about keeping track of the cash you spend is that you can choose between doing it manually, such as by entering the amounts from your receipts into a spread sheet program, or use spending tracking software. Even keeping a notebook with a pen and paper as well as a large envelope for receipts is fine. The main thing is to add up what you spend cash on as well as track payments and checks going through your back account so you always know the current state of your finances.