Budgeting can be a real challenge and many people fail several times at before they find a one that really works for their unique needs and goals. Here are several tips to help you find the right strategy that will help you spend less than you earn and stick to your budgeting plans.
Have a goal in mind
Budgeting just because you think you should will never be as successful as budgeting with a purpose in mind. With no real consequences for failing, it’s too easy to break your own rules and spend money in ways you didn’t budget for. Some common goals shared by many people include achieving debt freedom, saving for a house, anticipating a career change, or making a large purchase.
Budgeting requires discipline and – more often than not – giving up something you enjoy in order to achieve your goals. If you do not have a specific goal in mind, it’s hard to feel like your sacrifice is really worth it.
Know your actual earnings
One of the biggest mistakes that many people make when they think about how much they can spend in a month is not actually knowing how much they make. Simply taking your salary and dividing it by 12 months is not going to give you an accurate picture of how much you take home.
Start with a paystub and figure out your actual take home pay for an average month. After taxes, buying into benefits and various additional factors, the amount you get coming into the bank each month paints a very different picture than what your salary says.
Track your spending
Before attempting to create a budget, you will need to do a bit of research about your own spending habits. Start by going over the last couple of months and writing down all of your expenses. Keep track of how much you typically spend on things like eating out, going to the movies, or other forms of entertainment. This will help you to find your weaknesses – the things you typically overspend on – each month. By reducing this spending by 5-10%, you will begin to see significant savings that don’t make you miserable: the key to a budget you will actually stick to.
Additionally, making responsible choices plays a big part in your budgeting. If you’re a coffee lover, wake up 10 minutes early in the morning so you can brew and bring your own coffee to your commute instead of buying one along the way. Small changes like this will make a significant impact on your bankable revenue.
Choose the right bank
In order to make tracking your spending easier, it is important to find the right bank. Many banks will now offer online features like bill payments and transfers between different accounts. These features make tracking your spending easy and convenient. Additionally, be sure that you are not paying for additional services that you may be able to get for free elsewhere. Avoid banks with maintenance fees and ATM fees that will slowly chip away at your funds.
One of the most important things to consider when creating a budget is to keep it realistic. Much like starting a new diet, it can be very difficult to hold yourself to a new budget if you jump straight into the deep end. You will likely tire quickly of the harsh restrictions and begin breaking your budget rules before long. Start slowly by reaching short-term, low-number goals and save more as you adjust to your new lifestyle priorities.
Always be ready to adjust your budget if you find it is not working out for you. Everybody’s goals are different, and your budget should not be a source of frustration or aggravation to you.