Have you ever created a budget only to abandon it a day or two later because you had already overspent in several categories? Budgeting is not always an easy process and when you are first starting to budget it can be hard to do. However, once you master budgeting and your budget really begins to work for you, you will be amazed at the power that creating and following a budget gives you. It can help you reach your financial goals and have true financial security. Here are ten things you can do to get better at budgeting.
1. Make Your Budget Realistic
When you first create your budget, you may start out by arbitrarily assigning values to each of your categories or you may be looking to cut back too drastically in an area. The most important thing you can do to be successful at budgeting is to be realistic as you create your budget. If you want to reduce your grocery spending start by reducing it by just $50.00 the first month and then work on increasing the amount you cut each month. This also allows you to determine if the spending limits you are setting are attainable.
2. Make Your Budget Simple
Another key to making your budget work is to make it as simple as possible. This means that you make your categories easy to manage and that you divide them in a way so that you can start to control your spending. For example, it makes sense to create just one category for all your streaming television services instead of listing them separately. However, if you are trying to limit the amount you spend on eating out, it can help to split the categories between your work lunches and dinner out with your family. This allows you to pinpoint the different areas and determine how you can cut back.
3. Use an App to Budget
Traditionally budgeting has been done on paper or with a spreadsheet. There are so many budgeting apps available that make it easy to track your spending on the go. These apps will also connect with your checking account online and help you to update any purchases you may have missed. Take the time to explore the different options available and determine the one that will work best with your budget.
4. Go Old School with Your Budget
If you are having a hard time limiting your spending in specific categories, consider switching to cash or the envelope system. This system works because you only spend the money you actually have in hand, and you know that you have to stop when you run out. This means that you often don’t carry a debit or credit card with you. This helps you keep track of what you are spending at the grocery store or what you are spending on eating out.
5. Budget Every Day
Ideally, you will create a monthly budget that will plan on how you spend your money for the month. It is important to check in on that plan every single day. If you have a budgeting app, you can quickly do this by checking on the transactions you had that day. It can also allow you to check to see if your bank deposits came in or if you had any unexpected transactions or debits. If you are budgeting with a partner, it is important that you both check so that you do not accidentally overspend on the same category.
6. Create a Zero-Dollar Budget
A zero-dollar budget means that you give every dollar in your budget a specific purpose. This means that you do not have any money left over when you are finished. You can take any extra money and apply it to your financial goals like paying it toward your debt or putting it in savings. It also means that your expenses do not total more than your income.
7. Find Ways to Save with Your Budget
If you are struggling to stick to your budget, you likely need to find ways to save money. Start by looking at the categories that you have the most difficulty with. First, consider if you set the amount too low and if there is another category that you can cut instead. After you do that, look for ways to save on your expenses. You can save a lot of money by using coupons, promo codes, and other deals that are available to you.
8. Make a Goal for Your Budget
If you are having a hard time motivating yourself to stick to your budget, it can help to set a goal for yourself. You may have a goal of paying off your debt so that you can begin to invest or you may be saving up for a house or a dream vacation. It also can help to have a smaller monthly goal or reward that you give yourself if you stay on budget. This can help you stay motivated.
9. Plan for Unexpected and Annual Expenses
Unexpected expenses (like car repairs) or annual expenses (like car or property taxes) can throw your budget for a loop if you have not planned for them. For unexpected expenses, you can set up a slush fund or an emergency fund. Setting aside money each month to cover these expenses means that you can draw on that money to fix your car without stressing about how you will pay your mortgage that month. If you are worried you will use the money on unnecessary expenses, you can open an online savings account. You can get your savings started by picking an account with a sign-up bonus. Usually, it takes a day or two to transfer the money to your account, which is enough time to stop impulse purchases, but quick enough to cover these expenses. You can divide your annual expense by 12 and then set aside that amount each month to cover those expenses.
10. Don’t Give Up
Budgeting gets easier the longer you do it. This is why it is important to not give up and to keep on trying each month. After a few months, budgeting will become easier as you become better at planning how you spend your money. It will also become easier as you realize just how much peace of mind it gives you each month.
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