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Watching your pennies is key to maintaining a budget.Creating a budget may seem impossible for some; however, budgets are necessary for living a debt-free life and for achieving financial goals. Fortunately, a wealth of tips for creating and maintaining a good budget can get you started. Identifying and tracking your spending, as well as a good money management software program, are among the ideas you can employ to turn what seems an impossible task into doable one. - The first step in creating a budget is to identify how you are currently spending your money. You won't be able to budget unless you know what you buy and how much you spend on it. Having this information makes it that much easier to know where to cut back. For example, all those trips to the convenience store for sodas might not seem like much, but they can quickly add up; cutting them out can save more money than you think.
- Once you've figured out where your money is going and decided where you need to cut back, you can determine what your goals are. Goals can include anything from paying off credit cards, to saving for a vacation, to establishing an emergency savings fund. An article on CNNMoney.com suggests buying software, like Quicken or Microsoft Money, to help you set and keep your goals.
- Tracking your spending may be the hardest part, but saving receipts for everything and passing up that second morning latte are critical for maintaining a budget. Determining how much money you want to spend on gas and groceries during the month, then putting that cash in an envelope will help you readily see where your money goes. Check with your bank as well, some banks, like Wells Fargo, have free online tools that can track your spending and help you maintain budgets.
- Don't count things like bonuses and tax refunds as part of your budget. That money won't last long, and a budget needs to be based on consistency and stability. Likewise, raises shouldn't be looked at as an excuse to expand the budget; they should be viewed as an opportunity to save more. Stay away from using credit cards for big purchases. Of course, credit cards are the best way to build a good credit score--but not if they're charged to the max and you can barely make the minimum payments. Use them once a month for lunch or coffee, then pay them off the next day. You'll never have to pay interest, and your restraint will show on your credit score.
