Sticking to a Budget Cost Management

Sticking to a budget involves keeping records, improving decision-making, and making long-term financial plans (Northcott & Doolin, 2000).  Establishing a budget is part of the process of managing finances in the home by matching income to expenses.  This process involves writing down all sources of income and all areas of expenditures of funds.  Next, the expenditure undergoes analyzing to determine if the expenditure represents the best use of income, when compared to the goals set.  Therefore, setting-up and following a budget is the beginning point of cost management in the home.

A budget is a plan for spending money.  Budgets help to achieve goals that have been set.  These goals require a plan to help determine the best way to allocate a monthly salary for goal attainment.  Usually developing a budget requires the tracking of income and expenditures on a weekly and monthly basis to gain an understanding of cash flow in the home.  Once a budget is established, it becomes the financial plan for spending and investing money intelligently in future activities.

Keeping accurate records serves as the basis for the development of a budget and provides information that help in sticking to a budget.  Once the budget is established, an analysis of spending habits becomes easier and allows for good decision-making on how to save and spend money.   The savings that accrue from a good cost management budget provide the motivation for sticking to a budget.

Following a budget is not easy at first but becomes a habit once the benefits become clear.  The unintended consequences of sticking to a budget are becoming a good financial planner, organizer, and manager of household expenses.  Careful management of personal finances makes it possible for long-term planning for automobiles, vacations, purchase of a home, and retirement.  Sticking to a budget can reduce debt and increase the amount of money available for investing in other areas of need. Therefore, the more experience and success one acquires from using a budget the more likely one sticks to the budget.  This experience creates time management skills, bookkeeping skills, and helps prepare for the filing of income taxes.

Finally, sticking to a budget becomes easier with use.  In the beginning, sticking to a budget is difficult because it requires discipline.  Through the process of time the skills of using a budget becomes better because the more the budget tool is used, the easier it becomes to use a budget.  Therefore, sticking to a budget becomes easier if there exists monthly reviews and one sees the immediate benefit from sticking to the budgetary guidelines.