6 Ways to Ease the Pain of Crafting Your First Budget

To ease the discomfort of putting your family on a budget for the first time, get some envelopes, tell your friends, and let yourself have some fun.

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Budgeting can be painful, especially for families just learning how to do it. That might explain why only 32 percent of households craft detailed monthly budgets, according to a Gallup survey. Here are six ways to ease the discomfort and shock of going on a budget and taking back control of your family's finances.

1. Monitor Your Spending Down to the Penny

A lot of people starting to budget fail to account for all of their expenses. Cash is usually the main culprit. How many time have you withdrawn money from the ATM and later been unable to remember where it all went? Dave Ramsey is famous for saying that you have to assign each dollar you earn a job before you start the month's spending.

"Managing your money is a marathon, not a sprint," says Holly Perez, consumer money expert at Intuit (INTU), the parent company for budgeting software Quicken and Mint. "Budgeting is a matter of knowing what you earn, what you owe, and where money is spent. What makes it complex is deciding where to cut back and where to divert more money."

Save your receipts. Keep a pen and paper with you to record expenses. Start by writing down every penny you spend for one week. You'll quickly see how easy it is, and it won't take you too long to find a system that works for you and lets you track expenses for the month. As your prowess grows, you can advance to Excel spreadsheets, Mint or online programs like You Need a Budget.

2. Don't Squander a Raise

A friend recently got a promotion. I asked what he is going to do with the nice raise, and he said that he was probably buying a new car. The raise almost equaled what his new car payment would be.

That would be fine if he needed a new car. But he didn't. That raise was a convenient sum equal to a monthly car payment -- and he didn't have any other plan for his extra money.

There is a danger of lifestyle creep when you earn a raise. Many people often start spending more money simply because more starts coming in. But what if you saved that entire raise? You could trick yourself into saving money. Or, you could use that raise to pay down debt. Live like you never even received the raise, and you'll ease your budgeting pain.

3. Fund Your Emergency Fund

Many people mistakenly allocate all of their income to current expenses and forget about building an emergency fund or investing for retirement. But accidents will inevitably happen. Having an emergency fund can ease the pain when they do.

Experts like Ramsey recommend saving at least $1,000 to start in an emergency fund. After you have gotten the hang of budgeting and paid off some of your consumer debt, boost your contributions to your emergency fund until you have three to six months of living expenses.

4. Have a System in Place for Spending

One of the best ways to ease the pain of budgeting is to have a system. My wife and I use a credit card to budget while earning reward points. But there are a lot of ways to stick to a spending plan.

Many financial experts recommend the envelope method. Use an envelope for each spending category. At the beginning of each month, place cash –- whatever you budgeted -- in the envelopes. When the cash is gone, you are through spending in the category this month.

5. Have a Little Fun

Don't forget to include categories and line items in the your budget for the occasional splurges like going out to eat or going to the movies. If you are not having a little fun, you are less inclined to keep up with your budgeting.

"Ease the transition into budgeting by having some fun with it," says Shannon McNay, community outreach and customer support manager for ReadyForZero. "Create your list of spending categories and don't forget to include the fun items. With some tweaking on the must-haves, you could find some more room for fun!"

6. Get Support From Your Friends

Don't hide the fact that you and your family are on a strict budget. If you only have a little bit to spend on entertainment this month, let your friends know. You'd be surprised how many feel your pain. Like a support group, friends can be a powerful force in helping us stick to our budgets.

"The hardest part of getting started with a budget is often making the time to get started," says Leslie Tayne, an attorney and debt specialist at Tayne Law Group. "This is not only because of our busy schedules but also because people tend to fear the budgeting process. Considering accepting a friend's help to support achieving your financial goals."

Likewise though, your friends can help derail your budgeting if you're not careful. Motivational speaker Jim Rohn used to say that "You are the average of the five people you spend the most time with." In other words, our income, attitudes and lifestyle will be similar to those of our five closest friends. If you like to spend a lot of money frivolously and not stick to a budget, chances are good that your closest friends behave the same way. Simply understanding that dynamic -- and choosing how to follow the mold or break it -- can help you stick to your own budget.

Have you been hesitant to start a budget? Do you find yourself struggling in the beginning? How have you gotten over the initial hurdle to ease the pain of budgeting?

Hank Coleman is the publisher of the popular personal finance blog Money Q&A, where he answers readers' tough money questions. Follow him on Twitter @MoneyQandA.

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