Now that you've made a budget, evaluate how sustainable it is. Here are a few alarm factors to look for:
Your grocery budget is too low - If you think that you are going to be eating ramen and TV dinners for the entire month, you may have a problem. While these are good options for cutting costs, they are not sustainable and often lack the nutrients or flavors to keep you going. This leaves you vulnerable to eating out and binge spending on more delicious foods.
You have no shopping / travel / entertainment budget - Keeping at least a very small allotment for fun stuff, such as shopping, travel, and entertainment, is important to quelling those impulsive cravings. Frivolous spending is good in very small quantities, since it keeps you happy, and from resenting your budget for restricting you too much.
Your expenses are as high as your income - If you are spending just as much as you are making, with nothing going towards retirement or educational savings, then you leave yourself vulnerable to emergency expenses that you cannot cover. This is where the 90% of your income spending limit comes in, for it builds a cushion into your budget for sudden medical bills, auto accidents, leaky roofs, etc.
You are relying on income that is not guaranteed - You don't count your chickens before they hatch, so don't count your money until it's yours. If your income statement includes items such as year end bonuses, tax refunds, investment gains, or an inheritance, you should remove these items and reevaluate your budget. It is better to be pleasantly surprised at the end of the year, rather than scrambling to cover expenses.
Your spending increases as your income increases, but inflation is not accounted for - Though your spending can naturally increase with your income, beware of the effect of inflation on the cost of living- your expenses will rise as well.
Motivating the Reluctant Budgeteer
Motivating yourself to budget is tough, but it's all psychological. Though different tricks work for different people, here are a few of most common:
Adjust that Attitude - You can do anything when you set your sights on it, so find a positive attitude towards budgeting to get yourself started! Instead of thinking “I have to deprive myself of these luxuries,” think “Every dollar I don’t spend on things I don’t need is another dollar towards my trip to Hawaii.”
Set Some Long Term Goals - These will help you keep on track, since there will be bigger goals that you have to look forward to. It will help control the instant gratification cravings, and help you through the tough times when you are distraught by family, work, illness, or social pressures. Some goals may include retirement funds, saving up for a big vacation in two years, or saving up to send your child to college in five years. Visualize your achievement of those long-term goals when you see something that you’re tempted to buy.
Freeze the credit cards - Yes, people actually do this. If you are a big credit card fan, who loves to spend on impulsive whims, freeze those credit cards for the times you need them most. Though they are great to have, and are good tools for emergencies, they can also be detrimental to your budget. For little expenses, pay in cash or with a debit card, where the money is drawn from your account on the spot. Doing this makes you feel the effect of the purchase right away, and makes buyers reconsider the necessity of purchases.
Budget in some "fun" money - Allow yourself just a little frivolous spending each month, for movies, a family ice cream night, or a new skirt. These small but feel-good purchases will give you something to look forwards to, and reinforce your commitment to your budget. However, make sure not to spend more than your allotted amount for these items.
Experiment with food - Make cooking a family fun activity. Find a new recipe on the internet and engage the whole family. This will provide a great source of entertainment and a good meal - reducing both dining out and entertainment expenses.
