Keys to Setting a Successful Budgetby Tim Manni
How often do you find yourself setting a financial budget but never sticking to it? The reason may be that many of us set budgetary goals in the short term. Instead of setting a weekly or monthly budget, try setting up one for six months to a year. Allowing yourself to spend a certain amount of cash during a given week or month doesn’t usually allow for larger, unexpected purchases that often pop up:
If you struggle with keeping a budget, it may be because you’re trying to predict your spending in time chunks that are just too small. A new study published in the Journal of Consumer Research found that people who made annual budgets were better able to predict their spending than those who made monthly budgets.
One reason yearly budgets are more accurate is that consumers consider a greater number of expense categories when they construct them.
Take for example contact lenses. It just so happens I’ve run out of my six-month supply that cost approximately $150. I admit, I don’t keep tabs on my disposable-contact inventory per se, so when I notice I have only one pair left, that’s an unexpected expense of nearly two hundred dollars, more than enough to throw my budget put me in the red.