The key to an effective budgeting is incorporating the practice in your daily routine. You may think you can survive as long as the flow of money is steady, but a lack of proper allocation will not keep you stable for long. Usually, people resort to this strategy only when their bills pile up and their funds fall short. Below is a step-by-step method on how to create a better financial plan and see the results within six months.

Emergency fund This should be the highlight of your allowance, wherein you should begin by monitoring your expenses. Ideally, you should set aside a certain amount every payday to prepare for unpleasant life surprises. This will serve as a safety stash and will prevent you from having to use your credit card or scrap a portion of your savings.

For someone who rents a place and has a manageable sum of debt, around $600 of this fund will be enough. However, for those with extra payments to make such as for a car and a house, your cash needs to be a little bigger. Moreover, an ‘emergency’ should be something valid, like a sudden need for repair. Clothes and other luxuries do not count since the purpose of this is to save you in case you are in urgent need of money.

Scale down and substitute Downsizing current or potential expenses and replacing them with something that works just as fine is the next step to an efficient budget. For example, if you pay $60 for a gym membership, you can split this amount into half and use some for repayment of debt. Instead of buying your everyday coffee from a pricey cafe, why not buy a coffeemaker instead? While cutting down on spending is also effective, a more convenient approach would be to find alternatives.

Eye on the prize Focusing on what you cannot get due to budgeting will make the practice distasteful. Try mixing your long and short term goals to keep you motivated. This may come in a simple form of luxury to bigger targets such as your own car. Being able to watch yourself reach your objectives can be satisfying while going through the process of cash allocation.

Look for income boosters Once you have finalized your budget in accordance to what you earn, you can find other sources of income such as investments. The number one advice for this is to be free of arrears. For the younger ones, opting for a high-risk,high-return can make up for a low interest debt.