Video:10 Features of a Successful Budget

Transcript:10 Features of a Successful Budget

In most budgets, the same few problems keep rearing their ugly heads. Here are ten most important features of a successful budget.

Categorize Your Budget

1. Put categories that fit your personal situation and your spending habits, not somebody else's.

2. Ensure accurate income projections.

3. There should be enough categories to give you a meaningful picture of where your money goes and where you might be able to cut costs, but not so much detail that tracking is a chore that you'll soon tire of.

4. Include expenses that don't occur on a monthly basis, such as auto maintenance, homeowners insurance, personal property taxes, service contracts, etc.

5. Regularly review categories to determine if you need more or fewer, review expenses, and brainstorm about ways to trim costs in each category.

Include Expenditures and Saving Deposits in Your Budget

6. Track and record cash expenditure. Cash spending is the biggest leak in most budgets. Cash disappears quickly and if you don't write down everything you spend it on, you'll have a distorted look at your spending.

7. Put in a line item for savings so you treat a contribution to your savings account just as you would a bill you owe.

A Budget Should Reflect Realistic Financial Goals

8. Put in realistic written goals. Budgeting isn't about tracking your costs, it's about setting financial goals (saving for a down payment on a house, buying a new car, getting out of debt, saving for retirement, putting your kids through college, traveling, etc.) and finding ways to meet them. Without goals, your budget is just a pair of handcuffs.

9. Identify spending patterns you may not have been aware of when you weren't tracking your spending.

10. Most importantly, motivate yourself and maintain a positive attitude!

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