When finances are tight, every penny counts. Sometimes when we are living paycheck-to-paycheck, it seems nearly impossible to save or get ahead; even more reason to start a budget. A budget is used, not only to know where everything is going, but also to make sure you don’t spend beyond more money than you make. Here are 3 steps towards successful budgeting to help relieve some financial stress.

1. Establishing the Budget. There are many tools you can use to start a budget. Paper, an excel spreadsheet or a free online program will all work; it just depends on what you’re comfortable with. If this is your first budget, paper will work just fine. Bring all your numbers to the table—income, bills and variable expenses (such as food, clothes, gas, etc). If you are not using a budget app or program, you can get your average variable expenses by adding the monthly amounts per category and then dividing the total by the number of months used. If you feel you have splurged on things, set your budget a little lower for these expenses.
2. Pay off Debt and Build a Savings. If you owe debt, such as student loans or credit cards, work on paying those down. Start paying extra on them one at a time in the order of highest interest first. Once you get one paid off, make sure not to treat that as one less payment if you still have outstanding debt. There is no such thing as having “extra” money if you have unpaid debt. Pay the amount you were paying and apply it towards the next on your list. Keep going until all is paid. It’s called the debt snowball method. It is also recommended that everyone has an emergency fund of at least $1,000. Set aside at least $20 a paycheck to get there. This emergency fund is just that—for an emergency. Once this fund goal is reached and all debt is paid, start on a 3 month living expenses fund. The 3-month expense fund is for that “just in case” moment, such as unexpected unemployment. Having this will prevent you from getting behind on bills while you find work.
3. Develop a system for spending. The envelope system seems to prove successful for many people. Put the budgeted amount of cash into envelopes labeled for food, entertainment, clothing, health & beauty, household, etc. When the cash is gone for the month, be sure not to dip into other envelopes. Stick to the budget. One of the goals with a budget is to avoid using credit cards as well, so only pay with cash. If you don’t have the cash for it, you don’t buy it. The only exception to this would be if you do have credit cards that have a zero balance. In this instance, purchase gas once a month and pay it off to keep your credit up. Other than that, don’t use them. If you have trouble with this, others have found that cutting them in half or freezing them in a baggie of water helps—whatever works.

Hope these tips help. Good Luck!