Most people consider budgeting the fastest way to better money management. Even if you’re already comfortable with your financial situation, a little budgeting can go a long way in making sure that you really are putting your money where you want it to go. You can pay your bills every month without having a budget in place, but laying out just how much you want to spend ahead of time can guarantee that you’ll have more left over each month: that can go to a retirement fund, rainy day savings or even to save up for a trip or other indulgence.

Priorities That Match Your Budget

While you may have a few ideas on where you would want to put a few extra dollars each month, you’ll want to start with setting priorities for your budget. There are plenty of people for whom the ability to eat out on a regular basis is a priority: everyone’s priorities are different and you have to take a few minutes to think them through.

There are certain priorities that have become almost stereotypical. Everyone’s expected to pay for a nice place, a good car and so on. But, when you’re planning your budget, it’s worth examining such expenses and deciding what you really think. Maybe you’re living in an apartment or house that really isn’t a priority for you — sure, you need a place to live, but there’s a big difference between a nicely habitable apartment and a show place.

Even cable television is a priority worth considering: are you purchasing it because watching certain shows, games and so forth is important to you? Think about it — and explore the alternatives, before deciding for sure.

Introducing New Priorities

If you take a look at where your money is going right now, you may notice that you’d like to add a new expense to your budget. You may even want to make such an expense a priority — maybe you’ve been meaning to add a hundred bucks to your savings account each month.

Whether or not your budget can easily accommodate such an expense, it can take a shift of your habits to make it a priority. The easiest way to handle it is to make that expense (or savings) automatic. If you don’t have to think about moving your money around, your budget will flow more smoothly. If, for some reason, an automatic transfer isn’t an option for a new priority, you’ll have to work hard to remember to take care of it — to make it a habit. Make an appointment with yourself once a month to cut a check, arrange for reminders or take whatever other steps you can to ensure that you take care of any priorities that are not yet habit.

Over time, the new priorities you set for your budget can become second nature. It’s worth revisiting your budgetary decisions, though. Your priorities can change surprisingly quickly. Even something as small as taking a new route to work each morning can affect your financial priorities.

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Budgeting is touted as some kind of cure all for many money problems. Spending too much? Create a budget! Not sure where you can save? Create a budget? Want to put more money into savings? Create a budget?

But for some of us, budgets don’t really work. It’s not that we’re bad with money. Instead, it’s just that budgeting doesn’t work for us. Maybe our bills are too variable, maybe we just don’t think in that format. No matter what, though, we just aren’t good at maintaining a budget, no matter how good we might be with the rest of our finances.

It’s not the end of the world, though. There are alternatives to budgets, that allow us just as much control over our money and where it goes. There are two in particular that I would like to focus on today.

The Spending Plan

A spending plan is a more flexible approach to money than budgeting. Rather than listing out all your bills for the next month and projecting your other expenses, a spending plan is a more general idea of your financial situation and where it’s going. It focuses on financial goals, rather than expected expenses and many people find it easier to use to get out of debt and save because of that fact.. You can create a spending plan for the next month, the next year or whatever length of time you find convenient.

A good spending plan should include the following:

• The income you expect to receive during the length of your plan — Don’t forget to include any windfalls, such as bonuses or gifts that are on the horizon.
• A list of fixed expenses, such as the telephone and cable — Include a general estimate of variable bills here, such as gas.
• A list of debts — While you may include a regular payment towards your debts in your fixed expenses, add the whole amount here. It can help clarify what your financial goals are (and where unallocated money might be best used).
• Large expenses you expect in the near future — If you know you’re going to need to replace your furnace or car, adding that information to your spending plan can remind you to allocate money to savings.

The Balanced Money Formula

The balanced money formula comes straight out of All Your Worth: The Ultimate Lifetime Money Plan. Instead of looking at expenses or goals, this approach focuses on income, and how you allocate it. If your spending is balanced, no more than 50 percent of your income will go to your ‘needs’ — those expenses you absolutely have to pay, such as housing and food. If you can get your needs down to 35 percent of your income, you’re doing amazingly well.

Of the remaining portion of your income, at least 20 percent should go to ’savings’ and you can use up to 30 percent for ‘wants’ — expenses that aren’t necessary, but you may want. Entertainment generally fits in this category, among other things.

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Recently I returned from my honeymoon cruise with some hard learned lessons on how to keep your money safe from not only thieves, but from yourself. One is to have a budget (and stick to it!), the other is to be extra vigilant when it comes to identity theft. As most people know, vacationing travelers are like walking bull’s-eyes to fraudsters. Follow these tips and you’ll have smooth sailing when it comes to your bank account.

Cruising is a unique vacation experience, as anyone who has been on one can tell you. Let me give you a quick rundown on how it works, and I’m sure you’ll see where budgeting can get tricky.

Your Room Card is Your Credit Card
The first thing that most people don’t realize is that there is no such thing as cash on a cruise ship. Nor is there anywhere that you can use your debit or credit card. That little room card you are issued when you get on board does a lot more than open your cabin. It is encoded with your personal information, as well as the credit card you used to book your cruise. Paid for your cruise in cash? Doesn’t matter. Before you board you’re asked for one anyway, as this will be your onboard account. All charges, from ordering a drink to paying for a massage will go to this card.

Obviously this is where things can get sticky. After a day or two of simply signing receipts, you start to disassociate the fact that all those charges are being transferred to the credit card you gave them in the beginning. Once the cruise is over, your on board account is tallied up and charged to your credit card. The front desk on the ship keeps a running statement of all your charges, so feel free to ask for a copy each day to see where you are in terms of your budget. If anything looks suspicious or unusual, ask the staff to produce the signed receipt for the purchase.

Use Your Credit Card On Shore
Something that you should do in any unfamiliar situation, but absolutely when you’re traveling is to use your credit card for purchases. For reasons mentioned in other articles, credit cards are much more secure and safe than debit cards or cash. While traveler’s checks are the old standby for vacationers, they are being accepted less and less due to fraud surrounding them. The alternative traveler’s check-card is nothing more than a pre-paid debit card, and easily compromised. A credit card doesn’t link to your money directly like a debit card does, and it gives you plenty of time to dispute any issues. If something does happen, and your credit card is overdrawn or disabled, you still can have your debit card as a backup if you need cash.

Balance The Books
If you’re using the same credit card on shore that you used to open your on-board account, be sure to keep track of your on shore purchases and add them to your statement from the ship. Some might see their statement from the ship and think that they are within their budget, when in fact they forgot about all the charges they had at their destinations.

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Whether you’re saving up to buy your first house or working on eliminating some credit card debt, just about every financial guru will tell you to be frugal — to cut down on unnecessary expenditures. It’s such widespread advice because it works — brown bagged lunches, fewer Starbucks lattes and wearing clothing that doesn’t require dry cleaning can help free up a lot of money in our collective budgets.

But a new budget is like a new diet: after a few days or weeks, we start asking ourselves just how long we’re going to suffer. How long are we going to deprive ourselves of those nights out with friends or that new DVD that we really want? When can we stop being frugal?

Well, it depends on how we depend frugality. After a while, we get used to certain parts of living on a smaller amount of money each month, but that can be boiled down to simple budgeting. We really shouldn’t ever stop managing our money; there may not be another house in our future, but it’s surprisingly easy to slip into bad credit habits even if we’ve been down that route before.

Depriving ourselves of every little luxury, though — I don’t actually consider that frugal. Most of us start keeping an eye on our finances in order to make our lives more comfortable. And part of that comfort is those little luxuries. Even early on in the budget-making process, I recommend putting at least a few dollars aside each month with the intention of having a little fun.

I’m not recommending bringing those lattes back into the budget, unless good coffee really is one of your favorite things in life. Instead, consider your options. What really is the most enjoyable part of your day? What makes you want to get up in the morning, or grab a friend to talk about? That’s where your luxury budget should go. And don’t stick with the same thing every month — our wants and needs change. This month, I may be eying a particularly good book, but next month, I may want to go out for a night on the town with my friends.

And as I’ve become more comfortable with my financial situation — less debt, more savings — I’ve even increased the amount that I put towards the little comforts of life. I’ve made a point of keeping some money in savings, building towards bigger purchases like a new computer or another luxury item.

Removing every single luxury from your life may seem like a good idea if you’re trying to reduce your spending. But if you do, you’ll make yourself miserable. You may not be able to stick to it, either. I’ve got to go back to that diet metaphor: a lot of people go on diets and do pretty well the first week. Then they slip up, and go back to their old habits. It works the same way with budgets, unfortunately. The best thing you can do is make your budget a little more comfortable. Sure, it may take a little longer to save up for that house or to pay off that credit card bill, but you’ve got a better chance of making it.

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There’s no question that everyone is looking for ways to tighten their belts these days; even if you are on comfortable financial footing, you may have noticed that frugality and budgeting make for a simpler life style. One of the biggest expenses every person faces, month in and month out, is housing. Not only do you have to pay rent or a mortgage, you have to pay utilities (in a time of rising energy costs — ouch!) as well as at least a few maintenance costs. But, for most of us, there are a few spots that we can reduce the amount of money we need to budget for our monthly housing needs.

1. Reduce utilities. The majority of American homes have a passing familiarity with energy efficiency at best. The fastest bill that you can cut is your utilities: even without upgrading to energy efficient appliances, you can still make a significant dent in your bill. Start by turning off and unplugging appliances you aren’t using — and make an effort to use less appliances in general. Rather than running your dryer, hang up a load of laundry or two to dry. Little tricks like this can significantly cut an energy bill.
2. Choose a smaller space. Smaller homes (apartments or houses) are often cheaper in just about every way. Of course, choosing a smaller space can be expensive — if you need to actually move all your stuff to a smaller home. You can get a portion of the benefit, though, by using a smaller portion of your home. For instance, if you aren’t using your guest room on a regular basis, why bother to heat it or cool it — or even plug in the clock radio in there? Simply shutting down a room that you don’t actually use can save you a little bit of cash.
3. Get a roommate. If you really aren’t using that room, why not rent it out? Bringing a roommate into your home can cut some significant costs. If you, in turn, are renting your home, you may need to check that your lease allows you to do so, but if you own your home, you can bring in as many boarders are you want.
4. Get rid of storage units. Even if your storage unit is a room in your home, you’re still losing money on that space (hey! you could be renting it out to a roommate!). But it’s much worse if you’re renting a storage unit just to house all your junk. The majority of storage units are used to hold junk that you don’t need — I’ve seen people pull a dumpster up to their storage unit and just pitch everything numerous times. And you may even be able to make some money off your stuff — try eBay or Craigslist.

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Budgeting your money is one of the best methods to control your spending, simply because you know where each of your dollars ends up. But you can’t allow your budget to turn into a straight jacket: you should control your budget, rather than the other way around.

Unfortunately, many people — especially when they’re first developing a personal budget — let the budget take the leading role, often in two different ways.

1. They don’t plan for changing circumstances, like a mid-month emergency.
2. They don’t change their budget in response to upcoming events, like moving.

You don’t need to carve your budget in stone: you do not need a budget that will work month in and month out. Instead, your budget should be a living document — the kind you can easily amend or change. Furthermore, you should plan to change it on a fairly regular basis. It isn’t unreasonable to expect that you’ll need to at least review your budget and make small changes every month or so. However, it is practically mandatory to revise your budget when you have something out of the ordinary coming up: a vacation, moving expenses or even the holidays.

Consider the expenses of moving to a new home: you may be able to tweak your budget from residence to residence fairly easily if the rent or mortgage payments are similar. But the actual act of moving should also figure into your budget: extra gasoline for your truck, renting a U-Haul or hiring movers each can require an allotment of money in your budget that you wouldn’t normally worry about.

So how can you make your budget flexible?

Start out by keeping track of your budget in such a way that you feel comfortable making changes. I use an spreadsheet, although I know many people who still feel more comfortable with a paper budget. The one warning I would like to make about a paper budget, though, is that most people aren’t comfortable marking up a piece of paper over and over again. You may wind up rewriting your budget, or otherwise spend too much time trying to make a simple piece of paper look a little clearer.

You should also make the effort to check your budget once a month, preferably with your calendar in hand. I like sitting down at the beginning of the month, and reviewing both upcoming events and what I expect to need to spend, all in one go. I typically set aside one afternoon a month for all sorts of paperwork, including my budget. Most people don’t need to spend hours tweaking their budget — some months you may only need 10 minutes. But don’t forget to look a couple months out. If you’re trying to save a little extra for a trip home for the holidays, you should take that into account when reviewing your budget several months earlier.

Lastly, you need to remember who’s in charge. It’s your budget, and you should never be scared to rip it up and start over, if you need to.

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