Give your savings account a nickname

The Envelope system is a way to track your variable expenses like food, entertainment, and drinks.

This method, preferably used weekly, allocates a certain amount in each category in labeled envelopes (food, drinks, movies, etc.). Once the envelope is empty, you are done spending in that category.

The principles that make a good budget, something you can stick to:

• Being Realistic: Being too strict is a recipe for failure.
• Making Adjustments: A budget is not set in stone, but a fluid thing.
• A Team Sport: If you live with a partner or spouse, you have to agree mutually on how to budget the financials.
• Expect the Unexpected: Keep an emergency fund, ideally 3-6 months of necessary expenses.
• Budgeting the Expected: Certain upcoming expenses need to be budgeted in advance, like property tax, holiday shopping, etc.

A consumer spends money and follows trends while an investor puts capital to work and takes advantage of trends.

Chronic consumers often go broke, and persistent investors often get rich.

• You feel the need to reward yourself after a hard day of work by buying new clothes/accessories or eating out.
• Lifestyle creep controls your expenses. When your income increases, you buy a new car or a more expensive house.
• You reserve your credit card for unexpected expenses instead of using an emergency fund.
• You rationalize using a credit card to buy things you might not purchase with a debit card.
• When something is on sale, you feel the urge to buy it, even if you wouldn't have otherwise bought it.
• You follow social trends.
• You don't think you have money to invest or the time for it.

There are a couple of paths you can take to pay off your high-interest debt when you're on a tight budget.

• The snowball method. For those who need to see progress, pay off the lowest balance first. You'll feel inspired to keep going.
• The avalanche method. Choose the debt with the highest interest rate to pay off first. This may require larger monthly payments and will take longer to see progress, but you will save the most money in the long run.
• If you need to prioritize your credit score, focus on paying down your credit cards first. Paying the ones you are near to maxing out will improve your score quickly by a few points.
• Set up payment plans, even if you can only afford a few dollars at a time. That way, your lenders can see you're paying something.

Financial professionals will advise you to cut out expensive nights out. In truth, you will have night's out, even when you're dirt poor.

To incorporate unplanned entertainment, set aside an amount each month. Be realistic. You can open another savings account for fun spending or you can use cash only.

From the day you start saving, put a reminder on your calendar once a week to work for one hour on your finances in some way. It could include reading, balancing the accounts, optimizing cash flow, researching funds, etc.

There is no right number of times to check on your account. If you feel the urge to make decisions based on the news or market changes, limit how many times you look at your accounts. With experience, you will gain more control.

Once you understand where your money is going and what is left for savings, you may feel demoralised. Even though the amount is small in the first few months, you may be surprised by how much your balance grows in six months or a year.

The power of compound interest is what helps accounts grow exponentially and reach your savings goals quicker.

Whatever income you are earning right now should be treated like it’s temporary.

Treat your current income as if it might need to stretch for as long as possible. It doesn't mean you need to cut back on everything, but you might need to consider cutting some of your expenses so that you can put more money into savings.

Saving money now is worth more than spending money later. This advice applies to any budget item that you could spend less on now.

Even if it is a really great deal, remind yourself that cash in hand now is worth more than an unnecessary purchase.

1. Determine how much you make on any given month.
2. List your bills: Once you determine how much money you'll make this month,  figure out how much money you need to spend next month.
3. Compare and contrast:  Once you see your monthly income and your monthly bills on paper, a clear picture of how much money is left over emerges.
4. Spend all of your money on paper: decide where that money will serve you best.
5. Track your spending.
6.  Make adjustments to get it right.

Debt payments may look confusing when you add it to the savings column. But the easiest way to build up a savings balance is not to have your money go toward debt. Once your debt is paid off, you can increase the savings.

Play around with your monthly budget to see where you can reduce your monthly spending:

• You could contact your internet company to get a discount.
• You can clip coupons and use rebate apps to spend less on your monthly groceries.
• You could set aside less for medical expenses if you have an emergency fund.

This becomes a problem when you’re spending for a life you can’t afford. It puts pressure on your budget and encourages you to live in a paycheck to paycheck cycle.

Assess your financial situation, cut back on your expenses, prioritize your money goals, and then come up with a new spending plan.

It’s hard to stick to a budget that doesn’t have a goal.

When there isn’t one, your budget becomes an afterthought rather than a spending plan to reach your financial goals.