Budgeting is often viewed as stressful and even difficult, maybe not difficult in coming up with the budget, difficult to follow at the very least. The truth though is that if you can't follow a simple budget, you'll have little chance of being financially responsible. If you can follow a few of the steps outlined below, you should at least give yourself a fighting chance when it comes to paying down debt, investing wisely, and still having money to enjoy life.



Balancing Investment and Debt

This is a fine line to straddle and many people do so poorly. By focusing too much on investments, you're likely ignoring your debts which probably costs you more in interest rates than your investments are saving. On the other hand, focusing too much on your debt may just lead to you spending more, thanks to the larger comfort zone afforded by the minimized debt, while not adequately preparing for the future.

Ideally you do want to minimize your debt as quickly as possible, starting of course with the higher interest rate debt first. Fixed-period loans may allow for overpayment or they may not, but credit cards can be paid down at any time and usually come with the highest interest rates, so they're a great place to start. As mentioned though, you need to avoid the trap of putting excessive amounts of credit back on the card once it's paid down or you're not accomplishing anything.

If you have a mortgage, you'll probably find that it's one of the cheapest loans you have as far as interest rates is considered. In the rush to own their own homes, many people go out of their way to make overpayments on their mortgage, but in line with what was mentioned above, this probably isn't a great idea. Your other debt will cost you much more in the long run, and you may even be able to invest the money for a higher return than what you'd be saving paying down the mortgage.

A good target range for investing is 10% of your income. This of course depends on your income and associated standard of living. If you find you can't afford 10%, it may be that you're living standards are too high for income, and you should cut back at least slightly. A more modest living space or vehicle, and cutting some of the extra bills off like cell phones, high speed internet or satellite T.V can all help in this respect.

Budgeting

With a general idea of how much money you should be investing and/or using to pay down your debt, you can now begin to figure out what you'll need to do to your budget to accommodate this. Your budget should be monitored for a few months to properly account for all the little miscellaneous spending which may not be as easy to map out. These other monthly things that pop up are often what drives people crazy when trying to make and stick to a budget and may eventually lead them to quit keeping one. By giving yourself at least a general idea of the average amount you spend on these unexpected purchases, you can more accurately prepare your full budget.

Now will come the moment of truth where you'll see how well your budget fits into your income level, and whether or not some trimming of the fat needs to be done. Another balancing act is needed here, as you don't want to sacrifice your present for the future, just as the other way around. If you try trimming your budget clean of any excess spending, putting away the chase rewards card, you may find it difficult to stick to it, as you simply won't have any money to do anything spontaneous or enjoy life.

Closing

Budgeting can certainly be daunting and humbling. The goal is to properly set a course that gives you both a well rounded and satisfying present and future, not leaning too heavily in either direction. Once you get locked into a nice budgetary zone, you'll find your stress is greatly reduced, and your optimism for the future greatly increased.