How to Get on a Budget & Pay Your Bills

Living by a budget is a sound way to control finances and save for major purchases, such as a house, college and retirement. If you constantly have difficulty managing your finances, a budget can put you back on track and strengthen your financial skills.

Commit to improving your relationship with money. It will take discipline and patience to get started with a budget, but giving up means staying stuck in your current rut.

Keep track of all your spending for one or two weeks to see where you can make changes in discretionary (optional) spending. Use a pocket notebook or PDA to record what you spend on food, gas, vending machines and shopping every day. You'll begin to see patterns of wasteful spending that you can eliminate or replace.

Review your financial situation. Gather up all your bills, bank statements, receipts and other documents related to your income and expenditures. Total up your monthly expenses and income. For bills that are not due monthly, you can take the total amount due and break it down into a monthly figure. Include the discretionary spending totals in your expense column.

Divide the expenses and income by four to get your weekly budget. You don't need to pay bills weekly, but you need to make sure you will have the cash available when bills come due. At this point, your financial picture is becoming clearer. You can determine what money, if any, you have left over each week to put towards debt or to fund an emergency savings account.

Set aside the extra cash for the first four to six weeks, as you will need it to make sure you can meet all your monthly obligations on time. When you have been living by your budget for at least a month, you can earmark the extra cash for savings or reducing debt.

Start refining your spending habits. Think about why you buy things, and whether you really need all the things you purchase. Do you need to dine out or hit the drive-through several times a week? Do you watch all those channels on satellite or cable? Can you live with used books instead of buying brand new ones at the bookstore? When you commit to changing your spending habits now, you will end up with more money later for things that truly are important.

Contact creditors to get help in modifying payments, if you find yourself not being able to meet your obligations. Utility companies sometimes offer budget plans that can lower your monthly expenditures for electricity and heat. Phone companies offer fixed-price monthly plans for local and long distance services.

Open a savings account, where you can store your weekly budget money until it is needed. If you bank online, you can set up an automatic transfer to take place each week on a specified date. Some employers will allow your pay to be direct deposited into more than one account. When you have determined the amount you will need to put back each week, you can modify your employer's direct deposit instructions and have that cash set aside without having to think about it.

Choose a day each week to work on your bills, budget and finances. Use financial software (Quicken, MS Money, etc.) to manage your budget, your debt and your bank accounts. Write out checks for all bills due for that week, and transfer only enough funds from your savings account to your checking account to cover those bills. Regular maintenance and monitoring of your finances will help you to stay focused on your financial goals and stay committed to your budget.


  • Stop applying for more credit cards, and stop using those that you do have. You will not be able to plan for a better financial future if you are constantly in credit card debt.


  • Do not get a debit or ATM card for your savings account. You must protect your budgeted money so that you can continue to pay your bills on time.