Control Your Spending With A Budget

With easy access to money through credit cards

, many people find they spend more each month than they actually have or can afford. It's easy to charge an expensive item on a credit card because money does not physically change hands. For example, one might charge a $200 item on their credit card without much thought, but probably think seriously about the purchase if required to pay for it with cash money. This leads to large credit card balances that can be difficult to pay off due to the monthly accrual of high percentage interest rates.

In recent years, bank debit cards have gained widespread use by people who want to avoid running up a large charge account balance with their credit card. However, debit cards can be as dangerous as credit cards because they are just as easy to use and people don't feel the emotional pain of money actually leaving their wallets. Furthermore, debit cards can lead to an overdrawn bank account. An overdrawn account can incur large overdraft fees which place additional strain on the already depleted account. Paying with cash is psychologically more difficult to do than merely swiping a piece of plastic where you don't actually see or handle the money.

If you can develop a habit of spending cash rather than using your credit or debit card, you will probably spend less, and reduce impulse buying. One way to control spending and climb out of debt is to set up a budget. A budget will help you manage your personal finances more effectively. There are many inexpensive and free consumer budgeting solutions available, all the way from pencil and paper budget systems to sophisticated budgeting software. It need not be complicated, expensive or time-consuming. Any budgeting system is good as long as you use it consistently. However, doing "more of the same" of what you're doing now will only result in continued financial angst.

One easy system to implement is called the envelope budgeting system. As the name implies, it uses envelopes to budget your spending. You merely set up a system of envelopes for each spending category you have, and put money in the envelopes to pay for each category's expenditures for the month. When the envelope is empty, you're done spending for the month. No going to the ATM for more money, no charging on your credit card, no more spending -- period.

By spending only what you have in the envelopes, you are forced to stop over-spending and charging up your credit cards. An envelope budgeting system will help you manage your finances more effectively and learn how to live within your means. But whether you use an envelope system or some other budgeting program, living on a budget can become a normal lifestyle as you pay off your debts, save more money, and build financial stability in your life.

by: Jesse Whitehead

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