Most people need some way of seeing where their money is going each month. A budget can help you feel more in control of your finances and make it easier to save money for your goals. Is budgeting not working for you? The trick is to figure out why and find a way to track your finances that works for you.
A budget is a fundamental component of financial health, but not all budgets are created equal. Creating a budget can be a frustrating task and too often, people go through the motions of creating a budget, only to have it fall apart after a few weeks or months. If this has ever happened to you, below are 7 useful tips to help you improve and stick to your budget.
Understand Your Budgeting Why
We all budget for different reasons, but whatever the reason, our budget helps us keep our why at the forefront. A budget forces you to map out your goals, save your money, keep track of your progress, and make your dreams a reality. The goal of a budget is to help us control our spending so that we can spend less than we make and focus our spending on what matters most to us. However you choose to budget, it is important to remind yourself of your why.
Pick a Better Budgeting Method
Sticking to a budget can be difficult, but it’s even harder to stick to if you pick a budgeting method that isn’t right for your financial situation. There is no single best budgeting application. What works best for one person might not work best for somebody else. Yet, there are several really good budgeting tools that are either free or very inexpensive.
If you’re a busy person, then you need to simplify your budget, so it isn’t too time-consuming, then the 80/20 budgeting method may be the best choice for you because it’s simple to do. With this method, you allocate 20% of your income to your savings accounts, and the other 80% goes to your living expenses and other amenities.
The goal of budgeting is to spend less than we make. One of the best ways to do this is to save first. Rather than saving what is left over at the end of the month, save first and spend the rest. This strategy takes advantage of behavioral finance. By getting money out of your checking account and into savings first, we are less likely to spend our savings during the month.
Don’t Be Afraid to Trim the Budget
Is budgeting not working for you? Brace yourself! It might be time for some budget cuts in your life. If things are tight right now, you can save money quickly by canceling your cable, dining out less, and shopping at discount clothing and grocery stores. Remember, your budget cuts are only temporary. You can always make adjustments later on.
Review Your Budget Regularly
Once your budget is set, it’s important to review it and your spending on a regular basis to be sure you are staying on track. A few elements of your budget are set in stone: You may get a raise, your expenses may change or you may reach a goal and want to plan for a new one. Whatever the reason, get into the habit of regularly checking in with your budget following the steps above.
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Create a Buffer in Your Budget
Put a small amount of money aside for unexpected expenses throughout the month. Label this as your miscellaneous category in your budget. That way when something comes up, you can cover it without taking away money you’ve already put somewhere else. Keep track of expenses that frequently end up in this category. Eventually, you might even want to promote them to a permanent spot in your budget.
Be Realistic About Your Budget
Are you struggling due to your budgeting not working? Create a budget that will not make you torture yourself. Being on a budget does not mean killing all your cravings and suffering yet you have the money. While making a budget, try to be as real as you can with yourself. Reflect on your previous expenses; what can’t you do without? What do you need? What about your wants? I always have a miscellaneous and emergency section in my budget which helps me take care of sudden situations and those moments when I feel I just need to go out to lift my mood even when I have food at home.
This helps me enjoy my way of saving because I do not feel like I am punishing myself. It feels more like creating a habit and sticking to it through discipline.
Creating a budget is only the first piece of the puzzle when it comes to managing your money. Money can be an emotional trigger for most, but changing your mindset and beliefs can help you repair your budgeting not working.
As you figure out what budgeting method works for you, remember that pivoting is ok. Pivoting is necessary for every aspect of your life when something is not working. Once you find something that works for you, stick with it.