I can make a budget, but how can I get myself to consistently follow my budget?
It's simple, really: Practice. Fiscal responsibility is not a trick you can learn look up on Google, or a service you can buy from your accountant.  Being responsible with your money is a skill that is learned over a lifetime.  The only way to get better at it is to practice, and not get discouraged when you make mistakes. Do a monthly budget, unique to each month, before the month begins, spend all of your money on paper. Use envelopes to help you keep track of how much you have left for things you buy throughout the month. Have separate envelopes for things like groceries, restaurants, clothing, entertainment. Put the amount of money for each category in cash in the envelope. Only spend the money out of the correct envelope and don't mix and mingle between envelopes. Pay in cash, with real money. Don't use credit or debit cards, it's proven you spend more when you are not paying with cash. Switch to cash for a few months. No debit. No credit. This will help for two reasons: Once you've broken the bad habits, you should be able to go back to cards for the convenience factor. To me, this question is really about setting and meeting goals. The process is the same, whether it's about exercising regularly, or saving, or whatever. You need to have clear, personally-relevant reasons for doing something.  Write down: Exactly why you want to save. It may seem trivial, but if you can't visualize the prize it's hard to stay motivated. How much can you afford to save? Use something like Mint.com to find out your real monthly expenses, as opposed to what you think you're spending. Also, don't get overzealous... leave yourself some money for small luxuries and unexpected expenses so you don't feel like a miser. Saving should be a joy, not torture. Automate the saving process. Set up an automatic transfer to move the amount you figured out in step 2 to your savings account on the same date you get paid. This is very important. By saving early you ensure there will be enough money to save. If you wait until the end of the month, there will usually not be anything left. Don't you dare touch your savings! (Except in a real emergency) If you must dip into your savings, immediately create a plan to put it back as soon as possible. Also, get into the habit of reading personal finance books, blogs, sites, etc. I recommend authors like Robert Kiyosaki, and Suze Orman. Good luck! And remember, there's nobody but you that can do it - so the most important tool here is your determination and persistence. Try a tool like mint.com that will send you text messages regarding how you budget is going.  If you use mint, set up your budget to send you reminders before you hit your budget.  Example:  if my budget for dining out is $100, I tell mint.com it is $50 and I get nagging text messages after $50 to remind me to keep a lid on my spending. Assuming what is taking you over budget are not essential costs such as fuel bills, food, mortgage etc. you could do the following. Work out your monthly disposable income after all essential base costs have been sutracted. Then simply keep a book of any additional spending.  It will be very easy to see if you're at risk of overspending. In fact, even when one has no need to budget it's still an excellent idea to keep a book of all your spending. It's surprising how useful it can be. It's a great reference for dues dates, sizes of past bills and provides an excellent cross check of your bank statement. It's not often that you find an error on your bank statement (at least it shouldn't be!), but my books have helped me locate three such errors over the past 25 years, which I'm sure would have gone unnoticed by most people. So my advice is, keep a book of your spending. Plan all your needs and put priority based on need & urgency. New Habit: Rethink. Rethink. Rethink. whenever your going to buy something. rethink before going to buy. remember what is your priority one than that and will this affect on your plans. if that affect, than dont buy. Lets leave it to that habit, that will take care of your budget yar............. Give all your money as well as your budget requirements to someone you really trust. Tell them to give you ONLY what your budget allows. As long as both of you take this seriously, this method will be very effective. Lazy man's budget.  Four separate accounts for timing of expenses: short (monthly; utilities etc.), medium (quarterly+; property taxes), long (yearly+; house improvements) and retirement.   Set target levels for each account, to cover 1 full cycle.  The short target is smallest; it should comfortably cover a month.  For me each target is about 10x larger than the last.  (Cycles & targets for a homeowner w/ family; YMMV).   All income goes in short term.  When an account gets above target level, the excess gets swept up to the next longer term account.  That's all I keep firm track of; takes just a few minutes a month. Watching the account balances vs. their targets (and how short some of them are of target) keeps me focused on spending, and thinking about how much I can sweep (or can't) next paycheck.
Funny because I'm fully aware that I have no idea about how this works. That's exactly why I'm here. I literally was asking people to inform me, to teach me a little bit. I googled information on business plan and that's the first thing it said. Are you guys failing to see the fact that I'm clueless? Did I ever admit to being a genius with an amazing strategy of becoming the next Donald Trump? And you're just like the other guy. You can't tell me what I have planned hasn't been done if you don't know what my plan is. And it hasn't been done, I'm not brain dead.. I can figure out if my idea is already there or not. How can you tell me what my rough estimate is like if you don't know what I'm doing as well. Are all businesses supposed to start off with a 500 million dollar budget? Are they all supposed to start off with a 100 dollar budget? No, it varies for what you're doing. I'll go back and sum up what I was tying to say originally and clearly failed apparently to get into your head.. I'm 18 years old, and have a great idea for a business that would interest many many people. I have no idea how to start, or what to do to learn about how to start, call me an idiot or what not but I don't care cause most people don't know how to start a business properly especially at my age. And I wish you people could be supportive of a young guy trying to start a business instead of discouraging him and trying to turn him down. What are my peers doing? Drugs and working min wage to spend their money on bullshit. And I'm trying to find a way to be different and more successful. Obviously I guess I didn't go the right route to learn about business since I have no idea how to start but that's all I want from this thread. All I want is for someone to tell me where to start, so that way while I'm making little money working right now, I could start learning how to start and grow an idea so that maybe my stupid ass can do something big somewhere down the road whether it takes a decade I dont give a fuck. What's your people's issue? I'm sorry I'm not as smart and amazing as you all. Now if someone is kind enough to take a few minutes to help someone out then that'd be appreciated. If not then waste your time somewhere else rather than discouraging me because I don't care. I have a dream and I'm gonna do what I can to make it come true. "I hear you (and those answering) use the words ""my money"" (or ""me to pay for stuff"") The sooner that ends, the better off you'll both be. My wife and I do have our own checking accounts that we maintain so she can write a check without notifying me, or I can buy her a birthday/mother's day/ etc gift without it showing in the joint account, but nearly all money flows through our joint account. Before we were married, the joint bank accounts were opened as was the joint brokerage account.  You need to work on the budget as a single project and without judging. It's good that your incomes are similar, it makes the dynamics of pooling seem more fair, but for those where one spouse is making far more than the other, the impulse to 'chip in' equally towards bills leaves the lower earner with nothing.  Will your wife go back to work after a maternity leave? Once she's back, and working for a time, things will settle down a bit. There's a postpartum time that's difficult. Women who have been through it will tell you that it can be pretty bad, and the best a guy can do is be understanding and supportive. As long as you are talking ""we"" with your wife, she'll see that you are both in it together. At the risk of sounding sexist, Women's clothing needs are different than men's. I could get away with owning 5 suits which could be replaced at the rate of one per year. If not for my wife, I can see in my own daughter how clothing makes her feel good about herself, and while I'm frugal with most of our budget, my clothing questions are 2 - Will it last? & Will it match other pieces you have? Therefore, clothing gets a line item all its own in the budget.  There are a number of financial things to consider, but I see you are in the UK, so I'll generalize. In the States, there are pretax benefits to help care for a child under 13 (called a dependent care account) and for medical expenses not covered by insurance (called flexible spending account). These let you take money from your pay pretax to use for specific expenses. If UK offers similar, I invite a user to edit the detail into my answer.  Last - once the kid comes into our lives, there's little room for many of the late teen/early 20's spending. Comics? DVDs? Those are the low hanging fruit of wasted money. Saving for retirement, and for University for the kid take priority.  I'm not one to quote cliches but a friend once offered this observation - ""If you are not happy but your wife is happy, you are still far happier than if you were happy but your wife is not happy.""" "I'll start with a question... Is the 63K before or after taxes?  The short answer to your question on how much is reasonable is: ""It depends."" It depends on a lot more than where you live, it depends on what you want... do you want to pay down debt? Do you want to save? Are you trying to buy a house? Those will influence how much you ""can"" (should let yourselves) spend. It also depends on your actual salary... just because I spend 5% of my salary on something doesn't mean bonkers to you if you're making 63,000 and I'm only making 10,000.  I also have a lot of respect for you trying to take this on. It's never easy. But I would also recommend you start by trying to see what you can do to track how much you are actually spending. That can be hard, especially if you mostly use cash.  Once you're tracking what you spend, I still think you're coming at this a bit backwards though... rather than ask 'how much is reasonable' to spend on those other expenses, you basically need to rule out the bigger items first. This means things like taxes, your housing, food, transportation, and kid-related expenses. (I've got 2.5 kids of my own.) I would guess that you're listing your pre-tax salaries on here... so start first with whatever it costs you to pay taxes. I'm a US citizen living in Berlin, haven't filed UK taxes, but uktaxcalculators.co.uk says that on 63,000 a year with 3 deductions your net earnings will actually be 43,500. That's 3,625/month.  Then what does it cost you each month for rent/utilities/etc. to put a house over your family's head? The rule of thumb they taught in my home-economics class was 35-40%, but that's not for Europe... you'll know what it costs. Let's say its 1,450 a month (40%) for rent and utilities and maybe insurance. That leaves 2,175.  The next necessity after housing is food. My current food budget is about 5-6% of my after-tax salary. But that may not compare... the cost to feed a family of 3 is a fairly fixed number, and our salaries aren't the same. As I said, I am a US expat living in Berlin, so I looked at this cost of living calculator, and it looks like groceries are about 7-10% higher there around Cardiff than here in Germany. Still, I spend about 120 € per week on food. That has a fair margin in it for splurging on ice cream and a couple brewskies. It feeds me (I'm almost 2m and about 100 kilos) and my family of four. Let's say you spend 100£ a week on groceries. For budgeting, that's 433£ a month. (52 weeks / 12 months == 4.333 weeks/month) But let's call it 500£. That leaves 1,675.  From here, you'll have to figure out the details of where your own money is going--that's why I said you should really start tracking your expenses somehow... even just for a short time. But for the purposes of completing the answers to your questions, the next step is to look at saving before you try spending anything else. A nice target is to aim for 10% of your after-tax pay going into a savings account... this is apart from any other investments. Let's say you do that, you'll be putting away 363£ per month. That leaves 1,300£.  As far as other expenses... you need some money for transport. You haven't mentioned car(s) but let's say you're spending another 500£ there. That would be about enough to cover one with the petrol you need to get around town. That leaves 800£ As far as a clothing budget and entertainment, I usually match my grocery budget with what I call ""mad money"". That's basically money that goes towards other stuff that I would love to categorize, but that my wife gets annoyed with my efforts to drill into on a regular basis. That's another 500£, which leaves 300£.  You mentioned debts... assuming that's a credit card at around 20% interest, you probably pay 133£ a month just in interest... (20% = 0.20 / 12 = 0.01667 x 8,000 = 133) plus some nominal payment towards principal. So let's call it 175£. That leaves you with 125£ of wiggle room, assuming I have even caught all of your expenses. And depending on how they're timed, you are probably feeling a serious squeeze in between paychecks. I recognize that you're asking specific questions, but I think that just based on the questions you need a bit more careful backing into the budget. And you REALLY need to track what you're spending for the time being, until you can say... right, we usually spend about this much on X... how can we cut it out?  From there the basics of getting your financial house in order are splattered across the interwebs. Make a budget... stick to it... pay down debts... save. Develop goals and mini incentives/rewards as a way to make sure your change your psyche about following a budget." "The whole point of the ""envelope system"" as I understand it is that it makes it easy to see that you are staying within your budget: If the envelope still has cash in it, then you still have money to spend on that budget category. If you did this with a bunch of debit cards, you would have to have a way to quickly and easily see the balance on that card for it to work. There is no physical envelope to look in. If your bank lets you check your balance with a cell-phone app I guess that would work. But at that point, why do you need separate debit cards? Just create a spreadsheet and update the numbers as you spend. The balance the bank shows is always going to be a little bit behind, because it takes time for transactions to make it through the system. I've seen on my credit cards that sometimes transactions show up the same day, but other times they can take several days or even a week or more. So keeping a spreadsheet would be more accurate, or at least, more timely. But all that said, I can check my bank balance and my credit card balances on web sites. I've never had a desire to check from a cell phone but at least some banks have such apps -- my daughter tells me she regularly checks her credit card balance from her cell phone. So I don't see why you couldn't do it with off-the-shelf technology. Side not, not really related to your question: I don't really see the point of the envelope system. Personally, I keep my checkbook electronically, using a little accounting app that I wrote myself so it's customized to my needs. I enter fixed bills, like insurance premiums and the mortgage payment, about a month in advance, so I can see that that money is already spoken for and just when it is going out. Besides that, what's the advantage of saying that you allot, say, $50 per month for clothes and $100 for gas for the car and $60 for snacks, and if you use up all your gas money this month than you can't drive anywhere even though you have money left in the clothes and snack envelopes? I mean, it makes good sense to say, ""The mortgage payment is due next week so I can't spend that money on entertainment, I have to keep it to pay the mortgage."" But I don't see the point in saying, ""I can't buy new shoes because the shoe envelope is empty. I've accumulated $5000 in the shampoo account since I went bald and don't use shampoo any more, but that money is off limits for shoes because it's allocated to shampoo.""" In my opinion, every person, regardless of his or her situation, should be keeping track of their personal finances.  In addition, I believe that everyone, regardless of their situation, should have some sort of budget/spending plan. For many people, it is tempting to ignore the details of their finances and not worry about it.  After all, the bank knows how much money I have, right?  I get a statement from them each month that shows what I have spent, and I can always go to the bank's website and find out how much money I have, right?  Unfortunately, this type of thinking can lead to several different problems. Overspending.  In olden days, it was difficult to spend more money than you had.  Most purchases were made in cash, so if your wallet had cash in it, you could spend it, and when your wallet was empty, you were required to stop spending.  In this age of credit and electronic transactions, this is no longer the case.  It is extremely easy to spend money that you don't yet have, and find yourself in debt.  Debt, of course, leads to interest charges and future burdens. Unpreparedness for the future.  Without a plan, it is difficult to know if you have saved up enough for large future expenses.  Will you have enough money to pay the water bill that only shows up once every three months or the property tax bill that only shows up once a year?  Will you have enough money to pay to fix your car when it breaks?  Will you have enough money to replace your car when it is time?  How about helping out your kids with college tuition, or funding your retirement?  Without a plan, all of these are very difficult to manage without proper accounting.   Anxiety.  Not having a clear picture of your finances can lead to anxiety.  This can happen whether or not you are actually overspending, and whether or not you have enough saved up to cover future expenses, because you simply don't know if you have adequately covered your situation or not.  Making a plan and doing the accounting necessary to ensure you are following your plan can take the worry out of your finances. Fear of spending.  There was an interesting question from a user last year who was not at all in trouble with his finances, yet was always afraid to spend any money, because he didn't have a budget/spending plan in place.  If you spend money on a vacation, are you putting your property tax bill in jeopardy?  With a good budget in place, you can know for sure whether or not you will have enough money to pay your future expenses and can spend on something else today. This can all be done with or without the aid of software, but like many things, a computer makes the job easier.  A good personal finance program will do two things: Keeps track of your spending and balances, apart from your bank.  The bank can only show you things that have cleared the bank.  If you set up future payments (outside of the bank), or you write a check that has not been cashed yet, or you spend money on a credit card and have not paid the bill yet, these will not be reflected in your bank balance online.  However, if you manually enter these things into your own personal finance program, you can see how much money you actually have available to spend. Lets you plan for future spending.  The spending plan, or budget, lets you assign a job to every dollar that you own.  By doing this, you won't spend rent money at the bar, and you won't spend the car insurance money on a vacation. I've written before about the details on how some of these software packages work.  To answer your question about double-entry accounting: Some software packages do use true double-entry accounting (GnuCash, Ledger) and some do not (YNAB, EveryDollar, Mvelopes).  In my opinion, double-entry accounting is an unnecessary complication for personal finances.  If you don't already know what double-entry accounting is, stick with one of the simpler solutions. "Some things are nearly universal, and have been mentioned already.  My ""favorite"" forseeable expenses in this category are: However, I also advocate saving for expenses that are specific to you.  Look back on your expenses for the last 12 months, minimum (18 or 24 may be better).  Ask yourself these questions: I ask about large expenditures because you may make enough that you can ""eat"" these lapses in budgeting, as I did for many years.  It is not an emergency now, but it turned into an emergency down the road as my spending went out of control.  Look at all expenditures over a certain level, say $100 or $200.   Some personal examples of expenses that aren't quite so universal, but turned into small emergencies: This last one was rather unexpected.  It is the reason why I ask the question ""why didn't I budget for it?""  These fees and dues are for my professional-level certifications.  In my industry, they are ""always"" paid for by the company.  A year ago, they weren't paid by my former employer because they planned to lay me off.  This year, they weren't paid by my present employer because I am technically a temporary worker (4 years is temporary?).  So, from now on, I plan to save for this expense.  If my employer pays my dues, then I stop saving for the expense, but keep the money I've saved." "You are at the point that many millions of people are at (and where I used to be) - you have no idea where your money is going. You just spend, spend, spend until there's nothing left, and/or you borrow more to keep going.  There are general rules of thumb on how much house and car you can afford, but there is a great deal of personal variation. Housing and utility costs vary greatly from location to location. City-dwellers can use public transit instead of buying and maintaining a car. How much other debt do you have that you need to pay off? Do you have expenses that are not common (e.g. medical bills)? A more personal approach would be to figure out your own budget. The first step is creating a written budget. Figure out how much you can spend in total (i.e. your take-home pay) and the start allocating that money to expenses until you run out. I started by looking backwards.  Look back at how much you spent on each category each month. List them in order of priority (e.g. food, health, housing, utilities, transportation, entertainment, everything else). If the money runs out you either stop spending or reduce spending in another category (e.g. can you cook a few extra meals at home instead of going out? Can you take lunch to work instead of a drive-through?) The amount you have left over now indicates how much more house and car you can afford. Once you get to a point where you can budget comfortably then you can start looking at saving for retirement and other long-term goals. This worked for me (and highlighted some areas where I overspent) because I had good categorized records (ironically because I used credit cards incessantly, which I mostly stopped once I created a budget). If you don't have good records, then you have to estimate.  How much do you think you spend on food, gas, etc. each month?  Then set aside that much and once it's gone don't spend anymore.  Now obviously you're not going to stop eating, but the idea is to plan ahead and realize ""I have only $20 left to spend on food this month - maybe I shouldn't go to the movies"". It takes lots of practice, and you won't get it right very often. If you have enough left over, you can set aside some as a ""cushion"" in case you do go over your budget, but if you want true financial discipline you should start by reducing other categories first. This is not easy by any means. It will take moths of practice and trial-and-error to get to a point that you're comfortable with the lifestyle that you can afford.   So in the end, there are only two variables in your equation - income and outflow.  Do you want more house? Either spend less on other things or increase your income." Determining how much you should budget to spend on any area of your budget is one of those hard topics to find good information about.  Part of the problem is that everyone has different priorities and needs, and incomes and expenses vary greatly depending upon where you live and your career choices. The best thing you can do is track your spending for 1-3 months (you can use the envelope system if you need to, to track and control how much you spend on miscellaneous things like lunches, coffee, etc).  The precision is important, though you probably dont need to measure to the penny, however you should capture all the areas where you spend money (even if you later gather them into more broad areas). Split your spending into three broad areas, and try to limit the spending for each of those areas to the stated percentages (adjust for your preferences). You state net Income $2600, and you stated you have $1731 of known expenses, so you are spending another $870 on groceries, debt payments, restaurants, unplanned expenses, and emergencies. Essentials (50%,$1300) - rent, transportation, food, utilites Total $972+groceries (you probably spend $400-600 on groceries, so your essentials are higher by $100-300 than you can afford.  You should try to cut your electricity usage ($30-50), and you may be able to find cheaper car insurance (save $20). Financial Priorities (30%,$780) - savings, debt payments Total $376, nearly 15% before you pay for credit cards and savings.  Please focus on paying off your debts (credit cards, window loan, student loans).  You are spending almost 10% of your income on student loans, and you cannot afford much other debt. Lifestyle (20%,$520) Total $279, over 10% of your income on communications!  Please try to cut cellphone, and DirectTV costs, at least until you have reduced debt. Since you have internet, your wife could use a voip provider (vonage, ooma telo, etc) or get an ipod touch and use skype or similar, at least until you get out of debt. You might consider trying to find a way to earn extra money, until you have paid off either the loan for windows, your credit card debt, or one of your student loans.