Want to improve your budgeting strategy? Consider these ten tips on how you can make the plan work:
Have a short-term and long-term strategy.
Where do you want to be at the end of the year financially?
Do you want to pay for your vacation 100% out of your savings instead of charging everything?
What about Christmas? Have you set up a Christmas savings plan so that at the end of the year you don’t start your New Year off with a huge credit card bill!
By having a long-term mindset, you can budget more efficiently. But don’t forget to allocate funds for an emergency!
Decide on your priorities.
Make a list of all your expenses and see which ones are on top of your priorities. As a rule of thumb, you should prioritize your debt like this:
- Necessities – Rent / Mortgage, utilities, food, car note
- Legal obligations – like taxes and child support
- High-interest debt – focus on paying these off. Too much of your money may be going to pay interest.
These are the most important things that your budget should include. But don’t forget that life is meant to be enjoyed! It’s very important to make sure you set aside money for personal savings and entertainment!
Use online budget tools.
There are a lot of great FREE online budgeting tools. An online budgeting tool is a great help so you can calculate your expenses more conveniently and keep track of your payment due dates and accounts. You can even set alerts to make sure that you will not miss your due date.
A great tool that is NEARLY free is (YNAB) You need a budget. Its packed with features and is easy to use. And at $50 a year it cost less than $5 a month to gain full control of your finances!
Learn from your mistakes.
It’s a good idea to reflect on the previous year when evaluating your finances.
Were you able to set aside enough savings for your personal and emergency fund? Or did you have a difficult time keeping up with your payments?
Did you have a problem with debt?
Are you guilty of spending more than what you earn?
Recognizing the areas where you fell short on your personal finances is the first step towards improvement. And also COMMITTING to the process and truly wanting to be in a better financial position next year then you are right now!
Cut back impulse buying.
Have you ever really kept track of your spending? What I mean is, have you written it down and analyzed it? Just like you have to do if you are following a diet, you keep a food diary. You need to do the same with your spending. You need to become more aware of everything you are spending your money on.
This week, carry a small notepad with you and write down everything you spend. Or use apps like Goodbudget Budget Planner to keep track of your spending. Include everything, even that pack of gum you pick up at the gas station.
Once you have done that, look at your spending. Did you spend more than what you had budgeted?
How much of your spending was essential versus impulse buying?
You know how they say we should practice mindful eating? Well, when we are following a budget we should practice “Mindful Spending”!
Calculate how much you COULD HAVE saved if you had kept to your budget and try to implement the adjustments for the following week and see how much you can save.
List building – Get in the habit of making a list before you go shopping. Not only will this cut down on your impulse shopping but if you plan ahead, you can keep an eye out for coupons that will help bring down the cost of these items even further!
Resolve not to buy any item that’s not on your list even if it is on sale or even if you absolutely love it.
Do not put yourself in a tempting situation.
Spending your Saturday window shopping isn’t a good activity for someone on a budget! You may find that “deal” that is too good to be true…but is also NOT ON YOUR BUDGET! Don’t go somewhere that can put your budget in jeopardy!
Don’t set goals that there is NO WAY you can reach. If you make the process “painful” you won’t stick with it! Or worse you will be constantly dipping into your “savings” to make ends meet.
Set realistic goals, even if you end up slowly building a savings account…you are at least heading in the right direction!
Share your financial goals with friends and family
Share your financial goals with your friends and talk about the steps you’re doing to make it work. Encourage your family and friends to try their own budget making strategies and to support you with your goals. You are more likely to stick to your budget knowing your friends and family are watching!
Completely depriving yourself of all things you love is not recommended. Sooner or later you are bound to break your budget plan if you torture yourself by not buying anything that makes you happy. Reward yourself at least once a month by purchasing an item that will make you smile and will inspire you to continue what you’ve started.
Just be mindful of your budget. Treating yourself doesn’t mean going out w/ your friends and spending all the money you just saved!
Save for entertainment.
Don’t forget to set aside a portion of your earnings to spend of leisurely activities. When we set up our budget we looked for a cheap way to watch movies. We LOVE watching movies so we found a company called MoviePass. We pay $9.99 each and we can see 1 movie a day! We see at least 3 – 5 movies a month!
Fall in love with nature! Staying entertained doesn’t have to cost an arm and a leg!
Interesting Read: How to eliminate debt