I came across this smart article from US News written by Kimberly Palmer, 10 Smart Ways to Improve Your Budget. I am an advocate of using budget as an important tool in managing our financial resources. That's the reason why I highly recommend this very practical and useful article.
Here goes:
10. Share your budgeting goals with others.
Whether you want to stop wasting money on unnecessary shopping trips or pay off your credit card debt, share those goals with friends and perhaps even strangers. Websites such as 43things.com and MyLifeList.org makes it easy to share goals with similarly-minded people.
9. Reward yourself.
Diets that force people to expunge almost everything tasty from their meals never seem to have much success. That principle applies to money, too. Denying ourselves every material pleasure turns money into a sad subject, instead of an empowering one. After all, you work hard for your money, so it should bring you some pleasure.
8. Avoid temptation.
If you were on a diet, would you stare at chocolate chip cookies all day? Of course not. So why do we torture ourselves by allowing catalogues full of shiny, new kitchen gadgets or tempting electronics to come through our mails slot every day? Cancel them.
7. Take the spending diary challenge.
Write down every single thing you spend money on for two weeks, along with notes on why and how it made you feel. You might be surprised to discover the real leaks in your budget. Instead of lunches out and cab rides, you might be wasting money on coffee and happy hours. After the two weeks is up, review the list and see what jumps out at you.
6. Consider your high and low points.
A quick review of where you went wrong—and right—over the past few months will help pinpoint your weaknesses. Did you end up spending twice as much as usual on plane tickets because you waited too long to buy them? Or did you buy overly expensive gifts? Don’t just beat yourself up; consider the good decisions you made, too, whether it was comparing prices before buying a new television or cooking more homemade meals.
5. Set money aside for leisure.
Research shows that people get the most pleasure out of spending on leisure activities, such as vacations, movie theater tickets, and hobbies, partly because these things usually involve spending time with other people. Don’t forget to reserve some cash for such happiness-inducing pleasures.
4. Consider the year, not just the month.
Budgeting for the year is better largely because we feel less confident in our monthly estimates, so add more of a buffer for unexpected expenses, according to research by University of Southern California’s Gulden Ulkumen, Cornell’s Manoj Thomas, and New York University’s Vicki Morwitz.
3. Time yourself.
Once you decide you need to buy a specific item—a new computer, for example, or a backpack—give yourself a specific time limit to make the purchase, such as a half-hour. “You don’t want to lose precious time sifting through options when your instinctive reaction will probably end up being the best decision,” says AnnaMaria Turano, co-author of Stopwatch Marketing: Take Charge of the Time When Your Customer Decides to Buy.
2. Harness the power of a Web tool.
On Mint.com,you can upload your account information and get immediate insight into where your money is going. You can then use that information to start saving more money, just in time for back-to-school season. Other online options include Wesabe.com,Pennyminder, and You Need a Budget.
1. Decide on your priorities.
Most people’s budgets revolve around three costs: food, housing, and transportation. After you budget for those expenses, which probably account for between half to two-thirds of your take-home pay, and factor in any debt payments, decide how to prioritize savings, household expenses, professional expenses, and entertainment.
My wife and I went on tour to HongKong this week. The first thing we did was to decide on our priorities when it came to spending. We had a budget and it helped us control our expenses and came out of this tour fully satisfied and rewarded. In the end, we enjoyed HongKong, Macau and Shenzhen a lot.
Here's to your debt-free life,
Jimmy
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