Budgeting tips: Find your savings-style

Learn how to craft a budget that suits your financial needs.

Develop a savings plan that fits your lifestyle and you'll be more likely to have success. Check out the following financial pitfalls and see what a good budget can do to correct them.

►Problem: Your bills come due throughout the month, and you worry about having enought in the bank to cover them.

►Solution: Pay your bills on payday. The easiest way to avoid overdrawing is to pay all of the bills that come due within your pay period at once. If you pay online, the bank will subtract the funds, leaving you to spend (or save) whatever you have left over with no worries.

►Problem: You overspend and rack up credit card debt.

►Solution: Use the envelope system. This tried-and-true method is the best way to cover allotted expenses if you don’t trust yourself with a debit or credit card. Put budgeted amounts of cash into separate envelopes for each category. If you reach into your grocery envelope and nothing’s there, eat from the pantry until the next payday, or pull cash from an envelope that can spare it.

►Problem: Details are not your strong suit, so assesing how you're doing on the budget is a pain.

►Solution: Automate your budget tracking. Using credit and debit cards is the simplest way to keep track of most of your purchases. Mint.com is a free online program that automatically updates information from your accounts and sorts transactions into categories. Check in for a complete picture of your spending. If you’re going over budget in any category, you’ll receive an e-mail warning.

►Problem: You need to put money aside for taxes, an emergency fund and a vacation, but want to keep the funds separate to avoid dipping into them.

►Solution: Set up distinct savings accounts. At smartypig.com and ingdirect.com (both FDIC insured) you can open as many no-fee accounts as you want and fund them with automatic withdrawals from your checking account (every payday, for example). When you need the cash, transferring it back to your checking account is simple.

►Problem: Your monthyly income fluctuates.

►Solution: Build a short-term emergency fund. Make sure it contains at least four weeks of savings, so during your leanest times you can get by. Then calculate a bare-bones budget for the lowest amount you expectto be paid. Include basic necessities—rent or mortgage, utilities, car payments, groceries, etc. During your flush months, plan to replenish anything you borrow from your fund. Or build a budget based on your average monthly earnings over the past 12 months. If you opt for this strategy, note that when your paycheck rises, you will need the discipline to save extra cash to cover shortfalls in your low months.