A couple looks at a laptop and discusses their finances.

5 Steps for Pain-Free Budgeting

It’s one of life’s greatest mysteries: By the time you pay your bills, you have little left over for savings, groceries and other important items. You rarely shop or indulge in expensive nights on the town. Where does all of your money go?

Financial difficulties are a significant source of stress for many families. You know you should log your spending habits and set limits for purchases. But you may delay this important task because you fear budgeting will require a total lifestyle change. Take heart: You can budget and cut costs without sacrificing all of life’s simple pleasures.

Pain-Free Budgeting

Get started on the path to better financial health with these five steps:

Step 1: Start a diary. Do you remember to make a deduction every time you swipe your debit card for a latte, DVD rental or fast-food lunch? These small purchases quickly add up. For two to four weeks, log every purchase you make and include why you bought the item. This not only gives you a realistic picture of your spending, but also highlights areas where you can make simple changes.

Step 2: Give your statement a thorough read. This may sound obvious, but when was the last time you evaluated the charges on your bank statement? You may uncover hidden fees or automatic withdrawals for services you can do without, such as magazine subscriptions, gym memberships and other unused monthly renewal services.

Step 3: Prioritize. Your budget should include (in order of priority) fixed payments, such as your house and car payments; credit card and other loan bills; savings; essentials, such as groceries and personal care items; and discretionary spending.

Try to save about 20 percent of your net monthly income. If this isn’t realistic, however, don’t give up on the idea of saving. Setting aside even $50 each month makes a difference. Determine how much you can comfortably save and set up a direct deposit so the money goes straight to your savings account.

Step 4: Use cash for discretionary purchases. If you have $100 left over for fun, using cash instead of swiping your debit card helps keep your spending in check and prevents the likelihood of forgotten charges that drain your bank account and budget.

Step 5: Become a more mindful shopper. Set on buying organic meats and veggies? You can still visit your favorite select grocer as long as you shop around for better deals on other items, such as cereal or bread. If a trip to the coffee shop is part of your routine, downsize from a medium latte every morning to drinking a small latte or regular coffee once or twice a week. You’ll benefit your waistline and save a few dollars you can put toward a date night or trip to the movies.

To get a well-rounded look at your well-being and how financial stress can affect your well-being, visit YourWellBeingScore.com.

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