Tips for Cutting Expenses & Sticking to Your Budget: The 7 Question Test

You've looked at your financial situation, identified expenses, allocated proper funds and created the perfect hypothetical budget for you and/or your family. Everything looks great; there's only one problem--actually having to live accordingly. In theory, we can all so easily minimize costs, eliminate unnecessary purchases, and save, save, save. But, what happens when we actually go to implement a budget? On day one many of us cave. We rationalize purchases and let ourselves off the hook far too often.

The first and foremost principle in abiding by a budget and properly managing personal finances is being disciplined. Being disciplined not only instills self-respect but it also gives us the leverage we need in taking back control of our financial lives. Unexpected emergencies, of course, arise and budgets need to be mended. But only in the extreme of circumstances is completely defying a budget actually necessary. When possible, unforeseen expenses should be paid for by cutting back on variable budgeted costs. In many cases, the overall household budget can still be respected even when you experience unexpected setbacks. When it comes to personal finance, frugality is the key in finding cheaper alternatives and saving money.

For all of the tempting purchases that fall into the category of non-emergency expenses, asking yourself a series of pertinent questions might be useful in keeping perspective. Obviously, these questions aren't fool-proof. They can be abused just like anything else. But when asked in good-conscience, they can be helpful in guiding proper spending.

Think of an item right now that you are considering purchasing and ask yourself the following questions. Honestly ask yourself these questions. You don't have to get defensive; you don't even have to tell anyone your answers. This exercise is just for you.

Is this a luxury item?

Can I honestly afford it?

How do others get by without having this option?

Is there a less expensive option that would still suit my needs?

Will my life go on if I don't purchase it?

Is this what will help me live a healthier and happier life?

Even if it really classifies as a need, can the purchase wait until another day?

Maybe your purchase passed the test; maybe it did not. The most important thing is to understand the difference between needs and wants because a real understanding of this principle modifies decisions and changes behavior. Being able to see the difference between purchases is what separates the wise from the not so wise when it comes to spending.

For example, food is a need. I know of no one that will dispute that. But, certainly staples such as bread and milk are different purchases than filet mignon and fancy, imported beverages. When we come to fully recognize that difference is when sticking to a budget becomes instinctive and easy. Following a prepared budget is its own financial reward. And becoming an overall disciplined individual is just icing on the cake.