Personal Finance: 5 ways to take the fear out of budgeting

Even those who have committed to a budget find the process difficult. One in five Americans say their biggest financial challenge is sticking to a budget, according to a 2015 GOBankingRates survey.

But budgeting does not have to be scary. There are numerous ways to make a friendly budget that caters to your individual needs. Here are five ways to take the fear out of creating a monthly budget.

Visualize yourself reaching the goal

Close your eyes. Picture yourself walking around and smiling because all of your debt is paid off. Your credit card is in your wallet and it has a zero balance. You know how much money is in your checking account, and you even have some money in your savings account.

How amazing does that feel? Jim Afremow, a sports psychology specialist for Arizona State University, calls this technique “visualize to actualize.”

Visualizing helps turn your ideal image into reality. Use this technique as motivation to propel you toward your financial goal.

Set small financial goals

By making financial goals smaller, they automatically become more attainable. For example, a small goal could be starting an emergency fund, paying down your credit card or saving for a down payment.

In fact, according to Forbes, research has shown that setting overly ambitious goals is a surefire way of not doing what you set out to do.

Keep in mind that financial goals vary by generation. For example, GOBankingRates’ survey found that older millennials (ages 25 to 34) are more concerned with saving for a home than any other age group.

Share your journey on social media

Announce your financial goals on social media, whether it’s via Twitter, Facebook or YouTube. Let the world know your budgeting plans and show them your progress.

This will help keep you accountable. Paula Pant writes in U.S. News & World Report’s The Frugal Shopper blog that public accountability is a great tool for keeping you on your game. Plus, it doesn’t seem like bragging if you share both the frustrations and the victories.

You might even want to consider starting your own blog. Doing so could be beneficial because there’s a strong community of supportive bloggers focused on budgeting.

Track your spending

If you are new to budgeting, start by tracking your spending, said Brittney Castro, founder and CEO of Financially Wise Women.

“You need to track your income and expenses to get a solid idea of where you are spending your money,” she said. “Try tracking this for a three-month period because some months are anomalies and you just need the average.”

When tracking, focus on two main areas: How much money is coming into the household every month, and how much is going out.

At GetRichSlowly, Holly Johnson stresses the importance of being honest with yourself. If you are shocked by some results, remember that the goal is to improve your financial life. Embrace it.

Use 50/20/30

Once you have tracked your expenses, Castro said you should see how they measure up to a 50/20/30 guideline. She said your spending should be divided up as follows:

▪ Fixed expenses (mortgage, rent, insurance): 50 percent

▪ Fun (dining out, Jay-Z concert – anything you want): 30 percent

▪ Financial obligations (extra debt payment, emergency cash and retirement): 20 percent

“When comparing your expenses against the 50/20/30, ask yourself, ‘Where do I fall?’ And, ‘Where should I focus my attention?’” said Castro.

This story was originally published September 30, 2015 at 10:00 AM with the headline "Personal Finance: 5 ways to take the fear out of budgeting."