Your budget might not look like anyone else's, and that's OK. The key isn't finding the best budget, but the best one for you. Your income, expenses and goals help determine what's right. Then it's a matter of sticking to it and making headway.
Most financial advisors can give guidance about how to create a budget and stay on track, but at the end of the day, creating a budget is up to you.
Here are three examples of individuals and couples who have created workable budgets and found some financial freedom.
A Couple Lives without Credit
Credit might be a normal part of life, but spending more than you earn contributes to financial troubles. Credit takes the place of money in the hand; you can buy what you can't afford at the moment. But if you save, the money will be there when you need it.
Steve and Annette Economides have lived without credit since 1982, and they believe their methods could work for anyone. In an interview with U.S. News and World Report, the Economides explain that the only credit they've relied on was their mortgage -- and they paid it off in nine years.
Annette offers a couple of her frugal living techniques:
Shop less often: "People think, 'If I don't go to the store every week, I'll miss all the sales.' The truth is you'll miss some, but you don't want to put yourself in the position very often where you're tempted to buy food you don't need." When she does catch sales, she stocks up.
Shop more frugally: "We realized that if you want something and you don't have the money for it, there's always someone who's getting rid of that thing you want," Annette says, emphasizing she never buys an item online at retail price. "If you're patient, you'll find it."
By shopping online through venues such as eBay and Craigslist, the Economides find bargains instead of paying retail.
A Young, Single Guy's Strategy to Pay Off Debt
Isaac, a 24-year-old IT consultant in DC, lives comfortably on a moderate salary of $60,000 annually. With his budget, he manages to pay something toward all of his debt, add to savings, and keep a bit for the occasional cocktail brunch.
Learnvest explains that Isaac's pay comes in once a month, so spending habits require discipline. His first priority is his "must pay" bills, such as rent, phone, utilities, etc. But for his credit cards, he has a different method. "My goal each month is to put $800 toward that debt, but I only pay off $400 of it when I get my paycheck, in case something comes up and I need that money. I hold onto the other half until the next pay period, and then I'll put whatever I haven't spent toward the credit cards. Otherwise, I'd just end up paying unforeseen expenses on a credit card, continuing the vicious cycle of debt."
Imperfect Examples are Opportunities to Learn
A budget is only as valuable as what you do with it. If it's not realistic, or if you have other problems, it's just another spreadsheet or piece of paper.
Dawn, from Kansas, tells Personal Budgeting that while she created a budget -- and another, and another -- there was always something missing. The numbers seemed to add up, but her savings account dwindled while her debts steadily grew.
Unexpected expenses aren't always unexpected. Dawn says, "At some point, it occurred to me that I wasn't really using my budget in the right way. Sure, I had listed out my income and expenses like everyone else does, but I hadn't taken into account things like saving for those not-so-unexpected expenses."
Some unexpected things can be reasonably predicted. As in Dawn's case, she realized she had to plan for them -- she needed savings. Once she made that connection, her financial struggles eased tremendously.
Budgets don't have to be perfect, and there's always room for improvement. Incomes change, as do goals, so your budget also needs flexibility.
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