Budgets are like diets. The concept is exactly the same. The purpose is exactly the same, to fundamentally change your relationship with food/money. There are some differences, though. I would never recommend a crash diet because of the effects it can have on your health. Crash budgets, though, can be a handy way to re-evaluate your finances and meet short term goals.

A crash budget should never be in place longer than 6 months, and 3 months is definitely preferable. You need a definitive goal and a specific end date. Say your family is going on vacation in August, and you want to have enough cash in savings so that when you get back, you can pay off the credit card and not pay any interest. You estimate (hopefully high) that you will spend $3,000 while on vacation. Since its mid-April, you will have May, June, and July to meet your goal.

Since you have 3 months to save $3,000, you know you need to save $1,000 per month. Its time to create your crash budget.

Start by writing down your take home income for each month. Then take $1,000 off of that. (Set up automatic withdrawals from your checking to your savings, in order to make sure the money gets saved.) Now that you’ve paid your goal first, start going through all of your other bills. Mortgage/rent and utilities first. Think about options like turning the heat down or not turning on the AC to save money, but these are the bills that need to be paid to keep a roof over your head, so you have to prioritize them.

Next comes other monthly bills that not paying could create problems- car payment, insurance, student loans, credit card bills. Because you’re in a crash budget, assume that you’re paying minimums.

How much do you have left? Now you have to make that amount stretch to fit groceries, gas, and your other variable expenditures for the month- without putting anything on the credit card, since the whole point of this crash budget is not to wrack up more credit card debt. It could be really tight.

Much like restrictive diets, the tighter the budget, the harder it is to stick to. And that’s why crash budgets should only be used for short periods of time. Try going too long on a tight budget and you’re sure to crack. A long term, this is the way we’re living life budget has to include some wiggle room. But for 3 months, in order to pay for the dream vacation, you can live without eating out, driving less, and buying the generic brand dish detergent.

I actually think its beneficial for your first experience with budgeting to be a crash budget. This is because achieving a definitive goal is positive reinforcement for the habit to begin with, and it forces you to re-evaluate your budget in a short amount to time. Since the key to any successful budget is figuring out what works and doesn’t work for you, re-evaluating is something that should be done often, especially in the early stages.

And one more thing, don’t stop tracking your spending. You will continue to need that information.