It’s time to incorporate some of the mechanics of budgeting into your budget. Until now, you’ve used your spending history to make your budget.

Take a look at your budget and review the income and expense categories and dollar amounts. Is there money left over after all the expenses are deducted from income? If so, great. If not, here’s the hard part. If your budget doesn’t balance (income > or = expenses) or if you want to include other things in your budget (such as saving for your goals) then you have 2 options:

1. Earn more money
2. Spend less
It may seem harsh but in order to balance your budget, you have choices to make. Focus on the expenses that you have control over – discretionary expenses. Decide what you will forgo in order to pay down your student loan faster, go on a vacation or buy a car. There is a place in your budget for long term savings goals such as buying a home or retirement. You may be able to afford only a small amount now, but starting sooner will pay huge benefits later.

Make it easy on yourself by:

• Paying with cash
• Set up automatic savings plans
• Increase loan payments
• Leave the credit cards at home

Whatever works for you. We’ll see how Lily does it in the next post.