BUDGETING is a term often linked to frustration, unbalanced chequebooks and personal failure. Most people know that it can help them sort out their finances, yet many of us still find ourselves living beyond our means.

Given the economic situation, how important is budgeting?

A budget, whether you have a little to spend or a lot, helps to ensure that all financial obligations are taken care of, and may even allow something to be saved as well.

After receiving my first official pay cheque, I became aware of just how many responsibilities I have (they seem to multiply in the presence of money) and how important it will be to curb my desire to spend. Hence, budgeting became the best thing since sliced bread…. Well, almost.

Budgeting does not mean you stop spending altogether. For example, during Fashion’s Night Out (FNO) last week there were massive sales on everything from clothes to books to kitchen sinks. While some of these may be viewed as luxuries, others could be seen as investments, and purchasing them during FNO would have been a wise move given the discounts. A kitchen sink could be seen as an investment. If a new one is needed and you purchase it, that is an investment as you won’t need another for years, maybe decades.

Here are some tips that will hopefully work for you as well as they have for me.

1. Creating a budget is often seen as the hardest part but it’s actually quite simple. Draw up a table to include all the expenses that you will have for the month. Mortgage, utilities, food, family obligations, medicine, transportation, anything that will need to be paid for. Also have a ‘miscellaneous’ category for the unplanned; you never know what may happen and preparation is key.

2. Once the budget has been created, the most important, and undebatable, step follows. Stick to it! The temptation will be there to get things that aren’t budgeted for but do not succumb. Like a diet, budgeting will get easier as you trim the excesses.

3. Living within the limits that your budget as set out will be difficult. Do not make purchases with bank cards, debit or credit. These not only make payments easier, they also make it harder to keep track of where your money is going. Take what cash you need and use that. Seeing it being spent may give you enough time to pause and think about just how much you need to make the budget work for you.

4. Determine how much of your budget can reasonably be allocated to savings. This may seem hard to do now, but it pays off in the long run when one needs to pay for, perhaps, a child’s tertiary education or a downpayment on that dream house.

5. Keep your receipts. Budgeting is only effective if you can keep track of all that’s been spent. While some things may seem too difficult to note, it is necessary. To simplify the process, you could save each expense in a text on your phone with the amount spent on it. Believe me, it works…

In these difficult times, we are being forced to be a little more frugal and a lot less impulsive. A budget is the best way to accomplish that goal.