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Budget Experts Share Their Secrets to Staying Debt-Free

[September 4th, 2015]

If you’ve struggled to stick to a budget in the past, don’t despair. You’re not alone, and there is hope. Making, and sticking to a budget doesn’t have to be painful—and it’s one of the best ways to get out of debt and stay out of debt, according to financial experts.

Traditional budgets would have you write down your estimated expenses, write down your income, and then assign an amount to each expense category. But how are you supposed to keep track of your spending throughout the month? It’s all too easy to lose track of how much you’re shelling out, especially on things like meals on the go or incidental expenses, like that five dollars your daughter needed for her kindergarten petting zoo field trip last week.

Here are a few new methods of budgeting that might work for you, if more traditional methods have failed in the past. Using these budgeting tricks could be the ticket to a debt-free tomorrow for you and your family, so read on.

#1: The Envelope Method. With this budgeting method, you decide how much you’re going to spend on each category every month. You’ll need an actual envelope for each spending category, so hit up your local office supply store before you sit down to start this project. Write down a spending category on each envelope: rent/mortgage, groceries, utilities, gas, restaurants, clothing, fast food, school supplies and trips, medical expenses like office visit co-pays, etc.

Now decide how much money you’ll spend in each category per month. Write that amount down on the envelope, and if possible, go ahead and put that amount of cash into the envelope. With this method, it’s best to be cash-based as much as possible. Of course, some things can’t be paid in cash, so you’ll have to pretend. Just put a checkmark on the outside of the envelope each month when you’ve paid that bill.

For things like groceries, clothing, and restaurants, it’s easier to be cash-based. Use the cash in the envelope, and when it’s gone, it’s gone. No more spending in that category until you fill the envelope next month.

#2: The Bucket Method. With this method, you have three buckets: spend, save, and give away. Decide how much of your income you’ll set aside each month in savings, how much you’ll give to charities or church, and how much you’ll spend. Each time you get a paycheck, divide your money into the (metaphorical) buckets. Once something is in the bucket, it can’t be taken out and put into another one.

What are the buckets, you ask? Well, you can use a savings account, a checking account, a reloadable prepaid card, or an envelope of cash—whichever method works best for you. The point is to have an assigned place for each spending bucket. You’ll still have to decide how to spend the money in the spending bucket, but at least you’ll have your savings and your charitable donations safely set aside.

#3: The Credit Card Method.
If you don’t have credit card debt, another easy thing to do is simply track your spending via credit card. Put it all on the card, and you’ll be able to easily see how much you’re spending each month, and where. Provided you can pay off your purchases each month, this method will work just fine—and earn you credit card rewards, to boot.

However you decide to budget, the important thing is to be realistic about what you can afford, and what you can’t. A credit card is a helpful financial tool, not a license to spend more than you have. Remember, budgeting doesn’t have to be a burden—it can even be fun.

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