The primary purpose for a budget is to guide and evaluate spending patterns.
- Limit the budget period to no more than one year. Preferable a calendar year so it lines up with your tax year.
- Keep it simple and short. Too much detail can make the budget cumbersome to make and use.
- Keep it flexible. Typically expenses follow a predictable path.
- Avoid information that won't add to the process. Example is food purchased at a grocery store is the same as food purchased at the health food store.
- Design the budget with specific goals in mind.
- Budgets should be consistent in form and content year from year. Limit category changes.
- Keep in mind that things today maybe different then in the past.
Maintaining the required records to determine whether you are living within the budget may not be easy. It sometimes can feel intrusive, but the financial rewards are significant. The use of budgeting software maybe a great place to start.