Household Budgeting: A Tough Love Way to Handle Your Budget

By Douglas Hanna

Developing and living by a household budget is by far the best way to get your expenses under control which, in turn, can mean a much less stressful life.

However, many families find it very difficult to stick to a budget. It does take hard work and a lot of self-discipline, at least in the beginning. The good news is that most families find the longer they can stick to a budget, the easier it becomes. This is because sticking to a budget eventually becomes an unconscious habit, just like driving a car. And once it becomes a habit, the budgeting process just sort of goes on cruise control and requires much less thought or effort.

But what do you do during those first three, four or six months, when sticking to a budget feels so difficult?

There are several answers to this. The first is to make sure your budget categories are realistic. You may think you can get by with $100 a week for groceries, but is this real? Do you have checks or receipts that verify how much you have been spending at the grocery store? You really need to know. Otherwise, you may budget too little. In turn, this becomes frustrating because you will always be over budget.

Second, make sure you have all categories covered. There are some categories that are easy -- rent, mortgage payment, utilities, car payments, etc. But think hard about all other categories such as clothing, eating out, prescriptions, pet care, tuition, books, allowances, movies, CDs and DVDs, and computer software and games, to name a few. If you don’t budget for all these kind of expenses, I promise they will bust your budget.

Finally, if you find you just can’t seem to stick to your budget, here’s a sort of tough love answer.

Go to your nearest office supply store and buy a box of #10 envelopes. Take them out and label one for each of your budget categories. Then write on each envelope the amount you have budgeted for that category.

For the purpose of this exercise, it is not necessary to break down general categories into subcategories. For example, you can label one envelope “entertainment” and not worry about envelopes for “movies,” “eating out,” “DVDs,” etc. Just be sure the number you write on the envelope for any general category represents the sum of all its subcategories.

When you next get paid, cash your paycheck and bring it all home in $50, $20 and $10 bills. Then put and amount of cash in each of the envelopes equal to the amount you budgeted for that particular 6category.

Now, as you need to pay bills or buy groceries, etc., use the cash in the corresponding envelopes to pay them. You will know when you have reached the budgeted amount for any category because its envelope will be empty. What do you do when you find an envelope is empty? You do nothing. That category is all finished for this pay period. If the envelope is empty and you still have expenses, either you haven’t budgeted correctly or you have overspent. You might be able to fudge and take funds from another category envelope. For example, if you have a week to go and are $40 short for groceries, you might be able to take the $40 out of the entertainment envelope. Just keep in mind this means $40 less for entertainment.

Get REAL control of your spending using the mvelopes system

Do this for a few months and I promise you will not only learn to budget accurately, you will learn to stick to your budget.