I can make a budget, but how can I get myself to consistently follow my budget?
It's simple, really: Practice. Fiscal responsibility is not a trick you can learn look up on Google, or a service you can buy from your accountant.  Being responsible with your money is a skill that is learned over a lifetime.  The only way to get better at it is to practice, and not get discouraged when you make mistakes. Do a monthly budget, unique to each month, before the month begins, spend all of your money on paper. Use envelopes to help you keep track of how much you have left for things you buy throughout the month. Have separate envelopes for things like groceries, restaurants, clothing, entertainment. Put the amount of money for each category in cash in the envelope. Only spend the money out of the correct envelope and don't mix and mingle between envelopes. Pay in cash, with real money. Don't use credit or debit cards, it's proven you spend more when you are not paying with cash. Switch to cash for a few months. No debit. No credit. This will help for two reasons: Once you've broken the bad habits, you should be able to go back to cards for the convenience factor. To me, this question is really about setting and meeting goals. The process is the same, whether it's about exercising regularly, or saving, or whatever. You need to have clear, personally-relevant reasons for doing something.  Write down: Exactly why you want to save. It may seem trivial, but if you can't visualize the prize it's hard to stay motivated. How much can you afford to save? Use something like Mint.com to find out your real monthly expenses, as opposed to what you think you're spending. Also, don't get overzealous... leave yourself some money for small luxuries and unexpected expenses so you don't feel like a miser. Saving should be a joy, not torture. Automate the saving process. Set up an automatic transfer to move the amount you figured out in step 2 to your savings account on the same date you get paid. This is very important. By saving early you ensure there will be enough money to save. If you wait until the end of the month, there will usually not be anything left. Don't you dare touch your savings! (Except in a real emergency) If you must dip into your savings, immediately create a plan to put it back as soon as possible. Also, get into the habit of reading personal finance books, blogs, sites, etc. I recommend authors like Robert Kiyosaki, and Suze Orman. Good luck! And remember, there's nobody but you that can do it - so the most important tool here is your determination and persistence. Try a tool like mint.com that will send you text messages regarding how you budget is going.  If you use mint, set up your budget to send you reminders before you hit your budget.  Example:  if my budget for dining out is $100, I tell mint.com it is $50 and I get nagging text messages after $50 to remind me to keep a lid on my spending. Assuming what is taking you over budget are not essential costs such as fuel bills, food, mortgage etc. you could do the following. Work out your monthly disposable income after all essential base costs have been sutracted. Then simply keep a book of any additional spending.  It will be very easy to see if you're at risk of overspending. In fact, even when one has no need to budget it's still an excellent idea to keep a book of all your spending. It's surprising how useful it can be. It's a great reference for dues dates, sizes of past bills and provides an excellent cross check of your bank statement. It's not often that you find an error on your bank statement (at least it shouldn't be!), but my books have helped me locate three such errors over the past 25 years, which I'm sure would have gone unnoticed by most people. So my advice is, keep a book of your spending. Plan all your needs and put priority based on need & urgency. New Habit: Rethink. Rethink. Rethink. whenever your going to buy something. rethink before going to buy. remember what is your priority one than that and will this affect on your plans. if that affect, than dont buy. Lets leave it to that habit, that will take care of your budget yar............. Give all your money as well as your budget requirements to someone you really trust. Tell them to give you ONLY what your budget allows. As long as both of you take this seriously, this method will be very effective. Lazy man's budget.  Four separate accounts for timing of expenses: short (monthly; utilities etc.), medium (quarterly+; property taxes), long (yearly+; house improvements) and retirement.   Set target levels for each account, to cover 1 full cycle.  The short target is smallest; it should comfortably cover a month.  For me each target is about 10x larger than the last.  (Cycles & targets for a homeowner w/ family; YMMV).   All income goes in short term.  When an account gets above target level, the excess gets swept up to the next longer term account.  That's all I keep firm track of; takes just a few minutes a month. Watching the account balances vs. their targets (and how short some of them are of target) keeps me focused on spending, and thinking about how much I can sweep (or can't) next paycheck.
Personal finances are not intuitive for everyone, and it can be a challenge to know what to do when you haven't been taught.  Congratulations on recognizing that you need to make a change. The first step that I would recommend is what you've already done: Assemble your bank statements so you can get an accurate picture of what money you currently have.  Keep organized folders so you can find your bank statements when you need them. In addition to the bank statements for your checking and savings accounts, you also need to assess any debt that you have.  Have you taken out any loans that need to be paid back?  Do you have any credit card debt?  Make a list of all your debts, and make sure that you have folders for these statements as well. Hopefully, you don't have any debts.  But if you are like most people, you owe money to someone, and you may even owe more money than you currently have in your bank accounts.  If you have debts, fixing this problem will be one of your goals. No matter what your debt is, you need to make sure that from now on, you don't spend more money than you take in as income.  To do this, you need to make a budget. A budget is a plan for spending your money.  To get started with a budget, make a list of all the income you will receive this month.  Add it up, and write that amount at the top of a page.  Next, you want to make a list of all the expenses you will have this month.  Some of these expenses are more or less fixed: rent, utility bills, etc.  Write those down first.  Some of the expenses you have more control over, such as food and entertainment.  Give yourself some money to spend on each of these.  You may also have some larger expenses that will happen in the future, such as a tuition or insurance payment.  Allocate some money to those, so that by the time that payment comes around, you will have saved enough to pay for those expenses. If you find that you don't have enough income to cover all of your expenses in a month, you need to either reduce your expenses somewhere or increase your income until your budget is at a point where you have money left over at the end of each month. After you've gotten to this point, the next step is figuring out what to do with that extra money left over.  This is where your goals come into play.  If you have debt, I recommend that one of your first goals is to eliminate that debt as fast as possible.  If you have no money saved, you should make one of your goals saving some money as an emergency fund.  See the question Oversimplify it for me: the correct order of investing for some ideas on what order you should place your goals. Doing the budget and tracking all of your spending on paper is possible, but many people find that using the right software to help you do this is much easier.  I have written before on choosing budgeting software.  All of the budgeting software packages I mentioned in that post are from the U.S., but many of them can successfully be used in Europe.  YNAB, the program I use, even has an unofficial German users community that you might find useful. One of the things that budgeting software will help you with is the process of reconciling your bank statements.  This is where you go through the bank statement each month and compare it to your own record of spending transactions in your budget.  If there are any transactions that appear in the statement that you don't have recorded, you need to figure out why.  Either it is an expense that you forgot to record, or it is a charge that you did not make.  Record it if it is legitimate, or dispute the expense if it is fraudulent. For more information, look around at some of the questions tagged budget.  I also recommend the book The Total Money Makeover by Dave Ramsey, which will provide more help in making a budget and getting out of debt. "Trying to figure out how much money you have available each day sounds like you're making this more complicated than it needs to be. Unless you're extremely tight and you're trying to squeeze by day by day, asking ""do I have enough cash to buy food for today?"" and so on, you're doing too much work. Here's what I do. I make a list of all my bills. Some are a fixed amount every month, like the mortgage and insurance premiums. Others are variable, like electric and heating bills, but still pretty predictable.  Most bills are monthly, but I have a few that come less frequently, like water bills in my area come every 3 months and I have to pay property taxes twice a year. For these you have to calculate how much they cost each month. Like for the water bill, it's once every 3 months so I divide a typical bill by 3. Always round up or estimate a little high to be safe. Groceries are a little tricky because I don't buy groceries on any regular schedule, and sometimes I buy a whole bunch at once and other times just a few things. When groceries were a bigger share of my income, I kept track of what I spent for a couple of months to figure out an average per month. (Today I'm a little richer and I just think of groceries as coming from my spending money.) I allocate a percentage of my income for contributions to church and charities and count this just like bills. It's a good idea to put aside something for savings and/or paying down any outstanding loans every month. Then I add these up to say okay, here's how much I need each month to pay the bills. Subtract that from my monthly income and that's what I have for spending money. I get paid twice a month so I generally pay bills when I get paid. For most bills the due date is far enough ahead that I can wait the maximum half a month to pay it. (Worst case the bill comes the day after I pay the bills from this paycheck.)  Then I keep enough money in my checking account to, (a) Cover any bills until the next paycheck and allow for the particularly large bills; and (b) provide some cushion in case I make a mistake -- forget to record a check or make an arithmetic error or whatever; and (c) provide some cushion for short-term unexpected expenses. To be safe, (a) should be the total of your bills for a month, or as close to that as you can manage. (b) should be a couple of hundred dollars if you can manage it, more if you make a lot of mistakes. If you've calculated your expenses properly and only spend the difference, keeping enough money in the bank should fall out naturally. I think it's a lot easier to try to manage your money on a monthly basis than on a daily basis. Most of us don't spend money every day, and we spend wildly different amounts from day to day. Most days I probably spend zero, but then one day I'll buy a new TV or computer and spend hundreds.  Update in response to question What I do in real life is this: To calculate my available cash to spend, I simply take the balance in my checking account -- assuming that all checks and electronic payments have cleared. My mortgage is deducted from my checking every month so I post that to my checking a month in advance. I pay a lot of things with automatic charges to a credit card these days, so my credit card bills are large and can't be ignored. So subtract my credit card balances. Subtract my reserve amount. What's left is how much I can afford to spend. So for example: Say I look at the balance in my checkbook today and it's, say, $3000. That's the balance after any checks and other transactions have cleared, and after subtracting my next mortgage payment. Then I subtract what I owe on credit cards. Let's say that was $1,200. So that leaves $1,800. I try to keep a reserve of $1,500. That's plenty to pay my routine monthly bills and leave a healthy reserve. So subtract another $1,500 leaves $300. That's how much I can spend. I could keep track of this with a spreadsheet or a database but what would that gain? The amount in my checking account is actual money. Any spreadsheet could accumulate errors and get farther and farther from accurate values. I use a spreadsheet to figure out how much spending money I should have each month, but that's just to use as a guideline. If it came to, say, $100, I wouldn't make grandiose plans about buying a new Mercedes. If it came to $5,000 a month than buying a fancy new car might be realistic. It also tells me how much I can spend without having to carefully check balances and add it up. These days I have a fair amount of spending money so when, for example, I recently decided I wanted to buy some software that cost $100 I just bought it with barely a second thought. When my spending money was more like $100 a month, lunch at a fast food place was a big event that I planned weeks in advance. (Obviously, I hope, don't get stupid about ""small amounts"". If you can easily afford $100 for an impulse purchase, that doesn't mean that you can afford $100 five times a day every day.) Two caveats: 1. It helps to have a limited number of credit cards so you can keep the balances under control. I have two credit cards I use for almost everything, so I only have two balances to keep track of. I used to have more and it got confusing, it was easy to lose track of how much I really owed, which is a set up for getting in trouble." There are a lot of good answers above, all of them will probably work for you in some way or another. One point to note (from the procrastination theme) is that you could invest your free money that you have currently in some investment instrument which would require you to do some paperwork etc. to get out, this way the immediate cash flow is decreased and also invested. Now from each montly budget save a small amount for the things that you would like to buy. Give this small savings some months to accumulate so that you can afford only one of the items that you want to buy or target an item that you want to buy. After the money is accumulated, if you still want to buy the item, then you probably should. One point of note is that budgeting is also important on a monthly basis, Pete has provided excellent suggestion in this regard. If you are happy, really honestly happy, there is no need to change because you read it somewhere. While I believe that budgeting in some fun is smart so you don't go crazy, I am really speaking for myself.  I personally have to work at not spending more than I make, so I need to blow off some steam. I also think that you will find in the future something you want to do that costs money, and you would be glad to have it now. The same rules apply for you as they apply to everybody "Its really, really good of you to admit your short comings with a desire to improve them.  It takes courage.  Keep in mind that most of us that answer questions here are really ""good at money"" so we have a hard time relating.  Would you want people that are bad with money answering questions on a personal finance site?   While it is intimidating you will need a budget.  A budget is simply a plan for how to spend your money.  Your budget, based on your new pay frequency, will likely also need some cash flow planning as a single paycheck is unlikely to cover your largest expenses.  For example your rent/mortgage might be less than a single paycheck so you will have to save money from the previous paycheck to have enough money to pay it.   Your best bet is to have a friend or relative that is good with money help you setup a budget.  Do you have one?  If not you might inquire about a church or organization that offers Financial Peace University.  The teachers of the class often help people setup a budget and might be willing to do so for you.  You could also take the class which will improve your money management skills.  For $100 you'll have a lifetime pass to the class.  If it helps you avoid three late charges/bounce checks then the class is well worth it. Now as far as spending too much money.  I would recommend cash, but you have to do it the right way.  Here is the process that you have to follow to be successful with cash: Doing cash will give you a more concrete example of what spending means.  It won't work if you continue to hit the ATM ""for just $20 more"".  It will take you a bit to get used to it, but you will be surprised how quickly you improve at managing money." "I wrote a little program one time to try to do this.  I think I wrote it in Python or something. The idea was to have a list of ""projected expenses"" where each one would have things like the amount, the date of the next transaction, the frequency of the transaction, and so on.  The program would then simulate time, determining when the next transaction would be, updating balances, and so on.  You can actually do a very similar thing with a spreadsheet where you basically have a list of expenses that you manually paste in for each month in advance.  Simply keep a running balance of each row, and make sure you don't forget any transactions that should be happening. This works great for fixed expenses, or expenses that you know how much they are going to be for the next month.  If you don't know, you can estimate, for instance you can make an educated guess at how much your electric bill will be the next month (if you haven't gotten the bill yet) and you can estimate how much you will spend on fuel based on reviewing previous months and some idea of whether your usage will differ in the next month.  For variable expenses I would always err on the side of a larger amount than I expected to spend.  It isn't going to be possible to budget to the exact penny unless you lead a very simple life, but the extra you allocate is important to cushion unexpected and unavoidable overruns. Once you have this done for expenses against your bank account, you can see what your ""low water mark"" is for the month, or whatever time period you project out to.  If this is above your minimum, then you can see how much you can safely allocate to, e.g. paying off debt.  Throwing a credit card into the mix can make things a bit more predictable in the current month, especially for unpredictable amounts, but it is a bit more complicated as now you have a second account that you have to track that has to get deducted from your first account when it becomes due in the following month.  I am assuming a typical card where you have something like a 25 day grace period to pay without interest along with up to 30 days after the expense before the grace period starts, depending on the relationship between your cut-off date and when the actual expense occurs." "The key to this is budgeting. Without a budget, you don't know what you are spending your money on.  Let's say you would like to go to a movie with a friend.  Can you afford it?  Without a budget, it is difficult to answer this question.  Yes, you have enough money in your wallet, but if you don't go to the movies, you could be saving that money for a house.  ""But,"" you might say to yourself, ""surely one movie with my friend won't prevent me from saving my $10k for my house.""  And you might be right, but when you add up all the movies, coffees, and other discretionary spending up, it very well could.   At this point, you might be discouraged.  ""Do I seriously need to give up every single extravagance to make this work?  I don't have that kind of willpower!""  Luckily, here is where budgeting comes to the rescue. Budgeting is simply a plan for your money.  You have some monthly expenses that are more or less fixed: your rent, your utility bills, etc.  You have other expenses that are not exactly fixed, but are still necessary: groceries, fuel for your car, etc.  You also have longer-range expenses, such as insurance premiums that you only pay once or twice a year, but need to be accounted for.  List all of these expenses, and figure out how much that comes to each month.  What you have left over is available to you for other things. Next, you need to figure out how fast you want to save for this house, and balance that with the other things you might want to spend money on, such as entertainment.  If you start from $0 and want to save $10k, you could do it by saving $100 a month: in a little over 8 years, you'll have your $10k.  If you can increase this to $300 a month, you'll be there in less than 3 years. Now that you have a plan and everything is accounted for, very little willpower is needed.  You don't need to feel guilty every time you buy coffee; if the money is there in your coffee/snacks budget, go for it.  If you've got extra money for the month in your entertainment budget, take a date to the movies.  Your budget allows you to spend on those things, because you have a plan in place, and are not in danger of spending your rent money or your home savings. This can all be done on paper, in Excel, or even by placing cash in different envelopes.  However, it is easier to use budgeting software, such as YNAB, Mvelopes, or EveryDollar." As asked previous in the week, there is a big difference between budgeting and expense tracking.  Using software, like GNUCash, allows one to track their spending.   A budget is a plan, the tracking is what actually happened. I do not track expenses, although I do budget.  For me, hitting financial goals is good enough of a track, without investing the time and energy into tracking every penny.  One could easily criticize my method, as how can you have a good plan without continuous feedback? For me it is an example of the 80/20 principle.  If I put in 20% effort into making and sticking to a budget, I will obtain 80% of the financial success that a person who devotes 100% effort into budgeting and tracking.  A person with the same income and life events, who budgets and tracks, will likely be more successful that I, however, not overwhelmingly so.  For me time is better spent on other endeavors.  You seem to have this attitude as well, but those that do track have it as part of their path to financial success and probably view us as somewhat foolish.    This is another example how personal finance is more about behavior than math. "What you are doing is neither one.  You are simply watching to make sure you don't overdraw, which itself suggests you might be living hand to mouth and not saving.  Keeping track of your money and budgeting are useful tools which help people get on top of their money.  Which tends to have the effect of allowing you to save.   How much did you spend on groceries last month? Eating out? Gas? If you were ""keeping track of your money"", you could say immediately what you spent, and whether that is above or below average, and why.  How much do you plan to spend in the next 3 months on gas, groceries, eating out?  If you knew the answer to that question, then you would have a ""budget"".   And if those months go by, and your budget proves to have been accurate, or educates you as to what went wrong so you can learn and fix it... then your budget is a functioning document that is helping you master your money.  Certainly the more powerful of the two is the ""keeping track"", or accounting of what has happened to you so far.   It's important that you keep track of every penny without letting stuff ""slip through the cracks"".   Here you can use proper accounting techniques and maybe accounting software, just like businesses do where they reconcile their accounting against their bank statements and wallet cash. I shortcut that a little.  I buy gift cards for McDonalds, Panera, Starbucks, etc. and buy my meals with those.  That way, I only have one transaction to log, $40 - McDonalds gift card instead of a dozen little meals.  It works perfectly fine since I know all that money went to fast food.  A little more dangerous is that I treat wallet cash the same way, logging say two monthly entries of $100 to cash rather than 50 little transactions of left $1 tip at restaurant.  This only works because cash is a tiny part of my overall expenditures - not worth accounting.  If it added up to a significant part, I'd want accounting on that." "There's plenty of advice out there about how to set up a budget or track your expenses or ""pay yourself first"". This is all great advice but sometimes the hardest part is just getting in the right frugal mindset. Here's a couple tricks on how I did it.  Put yourself through a ""budget fire drill"" If you've never set a budget for yourself, you don't necessarily need to do that here... just live as though you had lost your job and savings through some imaginary catastrophe and live on the bare minimum for at least a month. Treat every dollar as though you only had a few left. Clip coupons, stop dining out, eat rice and beans, bike or car pool to work... whatever means possible to cut costs. If you're really into it, you can cancel your cable/Netflix/wine of the month bills and see how much you really miss them. This exercise will get you used to resisting impulse buys and train you to live through an actual financial disaster. There's also a bit of a game element here in that you can shoot for a ""high score""... the difference between the monthly expenditures for your fire drill and the previous month.   Understand the power of compound interest. Sit down with Excel and run some numbers for how your net worth will change long term if you saved more and paid down debt sooner. It will give you some realistic sense of the power of compound interest in terms that relate to your specific situation. Start simple... pick your top 10 recent non-essential purchases and calculate how much that would be worth if you had invested that money in the stock market earning 8% over the next thirty years. Then visualize your present self sneaking up to your future self and stealing that much money right out of your own wallet.  When I did that, it really resonated with me and made me think about how every dollar I spent on something non-essential was a kick to the crotch of poor old future me." "How about the new Mastercard ""In Control"" card http://www.pivotalpayments.com/ca/industry-news/mastercard-introduces-in-control-program-to-help-consumers-budget-800077802/ You can set budgets at your bank and go between getting alerts when you go over, or completely declined if you are out of money.  There are going to be obvious loop holes and slack in the system, but this system seems like a pretty neat start. Combine this with a bank account that does bill pay and you might have something to work with." Get on a written budget at the BEGINNING of the month. If you dont write down where your money goes BEFORE you spend it, you have no way of keeping track of it.  I couldn't do a thing until I got on a written budget but now that I am, I've paid off $10,000 in 7 months. "Make a list of all your expenses. I use an Excel spreadsheet but you can do it on the back of a napkin if you prefer. List fixed expenses, like rent, loan payments, insurance, etc. I include giving to church and charity as fixed expenses, but of course that's up to you. List regular but not fixed expenses, like food, heat and electricity, gas, etc. Come up with reasonable average or typical values for these. Keep records for at least a few months so you're not just guessing. (Though remember that some will vary with the season: presumably you spend a lot more on heat in the winter than in the summer, etc.) You should budget to put something into savings and retirement. If you're young and just starting out, it's easy to decide to postpone retirement savings. But the sooner you start, the more the money will add up. Even if you can't put away a lot, try to put away SOMETHING. And if you budget for it, you should just get used to not having this money to play with. Then total all this up and compare to your income. If the total is more than your income, you have a problem! You need to find a way to cut some expenses. I won't go any further with that thought -- that's another subject. Hopefully you have some money left over after paying all the regular expenses. That's what you have to play with for entertainment and other non-essentials. Make a schedule for paying your bills. I get paid twice a month, and so I pay most of my bills when I get a paycheck. I have some bills that I allocate to the first check of the month and some to the second, for others, whatever bills came in since my last check, I pay with the current check. I have it arranged so each check is big enough to pay all the bills that come from that check. If you can't do that, if you'll have a surplus from one check and a shortage from the next, then be sure to put money aside from the surplus check to cover the bills you'll pay at the next pay period.  Always pay your bills before you spend money on entertainment. Always have a plan to pay your bills. Don't say, ""oh, I'll come up with the money somehow"". If you have debt -- student loans, car loans, etc -- have a plan to pay it off. One of the most common traps people fall into is saying, ""I really need to get out of debt. And I'm going to start paying off my debt. Next month, because this month I really want to buy this way cool toy."" They put off getting out of debt until they have frittered away huge amounts of money on interest. Or worse, they keep accumulating new debt until they can't even pay the interest." I agree with the first poster- the first step is to measure your spending and put it down into raw numbers. Once you have the raw numbers, you will feel a natural inclination to improve on those numbers. Set yourself a daily target for cash / incidental expenses. It doesnt have to be a crazy target - just something you can achieve easily. Mark a 'tick' mark next to every day on the calendar that you meet that target (or spend less than the target). Gradually the momentum from the past few 'ticks' will automatically compel you to want to tick off the next day.  At the end of each week, lower the target a little. You'll find that when you start measuring your expenditure, you become more aware of how you might be wasting money. All too often we just go out and buy stuff we don't need without really thinking about it. Some companies like Royal Dutch Shell have multiple share classes to suit the tax regimes in Holland and the UK the A shares have dutch withholding tax applied and the B shares dont.  Also some split capital investment trusts have multiple share classes http://www.trustnet.com/Education/Split.aspx?ms=1