With all the advantages that are evident from personal budgeting, it is no wonder that more and more people are relying on them to reduce debts and increase their savings. However, all ‘budgeters’ need to be careful to avoid some common pitfalls that appear often.

Credit cards may seem like small pieces of plastic, however they can cause a great deal of trouble for the owners. It is common for people to make unwise purchases, which they would have avoided otherwise, because they had the credit card in their wallet. The best solution for many people is simply to get rid of credit cards and begin paying only by cash, check, or debit cards. You may want to keep one card handy for emergencies, but it is probably best to keep it out of reach, and far away from your wallet.

Another problem with budgeting is impatience. There are financial goals set, but people do not have the patience to complete a savings program. For instance, an individual begins setting aside money for a new car; however, after a few months they discover the car of their dreams. Rather than waiting, they make the purchase. This could pose some serious financial strains. Discipline is a must to prevent impatience from breaking your budget.
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So you are loaded down with bills to pay each month and are wondering how you can begin a savings account for emergencies and other high-expense endeavors. In other words, where can you find that extra cash to put away for later?

First, when configuring your budget, plan for your savings first. You will grow richer each month if you begin to pay yourself first. Before paying any bills, decide on a set amount that you will pay yourself first—maybe five or ten percent—or whatever you decide—of your paycheck. Then, deposit the amount into a savings account before paying any bills. If you wait until the end of the month, or next payday, to save what’s left, there won’t be anything left. Now, take the next step and make it harder for your self to dip into that money. It’s a simple trick, but you’ll be surprised how effective it is.
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At first it may seem difficult to limit spending and stick to a budget, however there are a few practical changes that you can make everyday that will cut your spending more than you expect. Small changes can really add up, not all spending cuts need to be dramatic or painful.

First, change your credit card behavior. Get in the habit of paying cash. This will help you avoid making a purchase unless you actually have the money available. If you decide to make a credit card purchase, be prepared to pay the balance off monthly. Before using a card stop and think: add your credit card interest rate to the purchase price. If you were paying cash, would you pay an extra 10%? 20%? You can save a lot of money by avoiding interest charges. If you already have a credit card balance, transfer the balance to a card with a low interest rate. And try to find and obtain a card that does not charge an annual fee.

Another tip is to pack your lunch everyday. All of those lunch hours spent at restaurants will add up. Bringing your own lunch can save you several dollars every day, which will add up over time. Even if you stick to the “special menu” and only spend $3 a day, that’s $60 a month on a five day work week. $6 a day spent on lunches adds up to $120 a month.
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The first step to gaining, and maintaining, control of your finances and avoiding financial trouble is to create and maintain a budget. It’s not as intimidating as it sounds, don’t worry. But it will take careful attention to details to get started properly.

First off, create a list of all your monthly income and also a list of your monthly expenses. When determining income, list all sources including alimony, child support, side jobs, etc. In calculating expenses, be sure to include housing, food, transportation, utilities, entertainment, etc. To gain an accurate reflection of actual expenses, sit down each night and write down expenses, just make sure to save receipts. Most people are astonished, once they actually begin keeping track, at how much money just “slips away”. A snack here, a cup of coffee there, that magazine that caught your eye while waiting in the checkout line.

Once you have accurately tracked ALL your expenditures for a month or so, determine if your income covers all of your expenses. If the answer is no, then some expenses will need to be reduced.
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