Budgeting does work. The problem when people first start budgeting is setting unrealistic expectations and giving up right away. The first problem is no different than a person that starts to train and works toward something. You are not going to be able to run a marathon right away. You must start small with maybe a 5k and work your way to a half marathon before going for a full one. This is also true with budgeting. Everyone wants to go for the gold and hit a home run right off the bat. The truth is you must start small and lower expectations. As you become better you can tinker and cut more. However, depriving yourself of a lot of spending is not going to work. This is where problem number two starts. You have setup your expectations but realize it is very hard. After a while, you become agitated or depressed and break it once. You then start to break it again and before you know it you are ready to completely quit. This happens with different parts of life. The person that decides to start working out, or the person that starts a new diet. We cannot expect to change right away. We need to take small steps and improve little by little.
Where do you start? You should break down your budget by categories. The fixed ones should be the easiest to add since you pay them frequently and see them on your statements. Some examples include housing, utilities, and streaming services. The ones that vary are the important ones. These you should be able to control month to month. You need to create categories for these like food, entertainment, and travel. How much money do you want to designate for each? This is important because these will assist you in keeping track of your expenses and showing you what costs you a lot of money.
Now going back to where we started. You want to know yourself a little bit and set a realistic budget. You know if you like to travel and need a healthy budget there. You know if you like entertainment and like to splurge here. The important part is reducing your budget on items you don’t care for much. For example, I do not like to shop for clothes. Guess what, I don’t have a large budget here. I pretty much only buy when the clothes are ripped or really faded. That is me though. You like to shop then make that a big budget. You like to go out to eat then make sure you have a nice budget there. Whatever you like, enjoy it! Just make sure you are realistic.