If you have completed your budget and found out that it does not balance, give your self a pat on the back.
Not only do most people lack the knowledge or desire to balance a budget, they won't even take the time to make a budget in the first place.
If you have found out that you are spending more than you make, you have taken a big first step to correcting this problem.
You cannot change what you do not know.
If you would like to find out if you are spending more than you make, you can get your free budget spreadsheet found at the link in my signature.
To put it simply there are really only two ways that you can balance a budget.
They are: 1.
Make more.
2.
Spend less.
That's it.
Most of the clients I have dealt with think there is some magic formula to balancing a budget.
Nope.
In fact, the more complicated you make it, the harder it will be.
Keep it simple.
If you are spending more than you make, you probably will need to do a blend of both to make it work.
Depending on your situation, you might not be able to just spend less and have your budget balance, that because of the two different types of expenses.
When we talk about expenses, there are generally two different types.
They are: 1.
Fixed expenses - Mortgage, car payments, credit card payments, student loans etc.
These expenses can be modified, however, it would take a lot of work or a big change to make it happen.
For example: selling your house and buying a smaller one to lower payments.
Selling your car for a cheaper one etc.
It can be done, but I know most people would not do it.
2.
Variable expenses - Eating out, entertainment, recreation, vacations etc.
These expenses don't have a monthly fixed payment attached to them.
Impulse purchases fit in this category.
This is where most people tend to overspend.
This is also the area that you have the most control over.
For a lot of people, a drastic cut in their variable expenses in usually in order.
A common problem that a lot of people get into is turning their variable expenses into fixed expenses.
This is a drastic mistake and should be avoided at all costs.
I call this "bad debt conversion", and it's basically buying variable expenses on credit cards thereby locking in a fixed payment.
Not only do you pay for the item several times over, you also lock in a fixed monthly payment, which puts stress on your cash flow.
Do this enough and you can pretty much guarantee you will be broke in no time.
The good news is that there are things you can do now to help balance your budget.
10 Easy Tips to Help Balance Your Budget: Make More Money: 1.
Work more overtime.
2.
Start a home-based business.
3.
Rent a room or the basement in your house.
4.
Find a better paying job.
5.
Make part-time money online.
Spend Less Money: 1.
Rent movies instead of going out.
2.
Cancel your gym membership and workout a home.
Jog around the block etc.
3.
Make your own coffee instead of going to the coffee shop.
4.
Cut out expensive vacations.
Go camping instead.
5.
Drink less alcohol or quit smoking.
These are just some examples of things you can do to help balance your personal budget.
Don't be afraid to get creative, small changes over time will yield big results.
Don't overcomplicate the concept of a budget.
Remember, the money in should at least equal the money out.
If it doesn't, then you have two options: make more or spend less, it's that easy.
Take a look at areas in your variable expenses that you can make changes in.
If you resolve to make one change per month, you will be on the right track in no time.
A properly balanced budget is the first step to true financial freedom.