For many Americans young and old, it is often difficult to create and stick to a budget that is guaranteed to aid them in meeting their financial goals. This could be blamed on many factors, such as impulse buying, overpaying for everyday goods and services, eating out too much, or even unplanned expenses.
 
However, when crafting a budget, it is imperative that one leaves enough room for flexibility, yet still curbs their desires to purchase overpriced items on a whim.
With that in mind, let us take a closer look at how one can create — and stick to — and effective budget.
 
Evaluate your income
Before you even consider evaluating your expenses, it is imperative that you take a close look at your total household income after taxes, 401(k) contributions, emergency savings, and any other costs that come directly out of your paycheck. This will ensure you know precisely how much money you and your spouse and/or children have to work with on a monthly basis — and put into perspective how much you can truly afford to spend.
 
Monitor your spending
Create a physical list of your fixed monthly expenses — such as your mortgage payment, utilities, car insurance, mobile plan, and credit card payments — and deduct that number from your monthly income.
Once you have completed that first step, you must also deduct your less predictable expenses, like your groceries, gas, entertainment, and so on. This is where you can determine how you can effectively cut down on your spending. For example, pack lunch and a single-serve coffee as opposed to buying lunch and expensive lattes on a regular basis. Or, reduce your entertainment expenses by going to the movies less frequently.
Although these cuts may seem drastic and difficult to hold to at first, you will eventually feel satisfied knowing that you are able to reach your financial benchmarks by making minimal sacrifices.
 
Set concrete goals
Throughout the process of creating and following a budget, it is imperative that you set goals that you can easily prioritize, rather than adapting or putting them off to fuel your reckless spending. Examples of these important financial goals include, but are not limited to: purchasing your first home, preparing to start a family, or even creating a college fund for one or more of your children.
 
Hold yourself accountable
This step is one of the most important, as it ensures you are truly committed to adhering to the financial guidelines you and your partner — or even your financial planner — established. Check in regularly to make sure you are still on track, and take corrections and criticisms seriously, as they are only being provided for your own benefit.
While this process certainly requires strong self-control and dedication, one can be sure the outcome of forming such habits will be worthwhile — both in the present and down the line.