If you are always scrambling at the end of the month because your bank balance is almost at zero…then there might be a problem with your budget (or lack thereof). Budgeting is one of those annoying life habits that does not seem necessary at first, but if done correctly, it can save you from wasting time and money.
But how do you actually buckle down and do it? Unfortunately, budgeting is not the easiest task but there are some ways to reel in your spending habits and start saving some cash as well.
The first step? Be completely and totally honest with yourself. It might not seem like it, but that is the hardest one to take. Look at your bank accounts, credit cards, income sources and really evaluate your spending. Try to categorize your purchases to understand where most of the money goes.
How much are you spending on rent, food, and other necessities? Are you eating out more often? There are lots of factors that contribute to this and it is different for each person. Take some time to understand how much money is really coming in each month and what you are currently spending it on.
Struggling with debts? Recognise if you have a problem and you need assistance. The first step is admitting whether you have an unmanageable amount of credit. Do you know What Lies in Your Debts?
Whether it is a detailed spreadsheet or a personal finance app like Acorns – the point is, you have to keep track of what you are spending. If it seems tedious logging in your purchases on spreadsheets, then consider using a personal finance app.
There is no need to make it too complicated – cutting back and defining fixed amounts of every aspect of your life will end up becoming difficult to maintain. But seeing it all add up can often be sobering for some and a way to remind yourself that unfortunately, you do not have the means to live the current lifestyle you have. Or it can also serve as an encouraging reminder when you are under budget and keep you motivated from spending more.
Budgeting is definitely difficult, especially in the beginning. No one likes to cut corners and it can feel tough trying to constantly be frugal. While the goal is not to be spending irresponsibly, do allow yourself a luxury or two in the month – treat yourself!
If you are under budget, or perhaps you have significantly cut down your spending, allow yourself some treats to keep that positive reinforcement going. Whether it is a dinner out, an extra drink when you are out with friends or even just a coffee, get a little something to reward yourself for a job well done.
Often it is difficult to save if you do not really have set goals in mind for what you need the money for. If you have specific goals in mind, it can often help curb your spending and really show you how far your money goes for you when you keep your spending in control.
Some common goals include holidays, reducing or eliminating debt, saving up for retirement or higher education. Whatever it is that you are dreaming about, set up a goal for yourself to get closer to that dream!
Keep your goals simple and achievable to keep yourself motivated instead of setting up something that will likely remove every ounce of fun in your life. Setting up super high expectations for yourself will only lead to disappointment and harder to stay motivated, so keep it simple.
For better or for worse, there are lots of ways to monitor your spending. Some choose not to engage in that but it is often a great option, in the beginning, to remind yourself of what your budget and savings goals are. You can set up alerts with your bank for your mobile phone when you make purchases above a certain amount, or if your bank balance is lower than a specific amount.
It might not seem like a pleasant reminder at first and it does not necessarily have to be a permanent option but it will really help ground your goals and remind you why it is that you needed to set up a budget in the first place.
At the end of the day, we are all human and have our flaws. For some, that is an inability to set and stick to a budget…and that is completely fine. To be more successful in this effort, it might be worth an effort to collaborate with someone else and budget together.
You would be surprised at how helpful it can be to have a partner in the process since it will force you to stay on track and provide a sense of accountability. Do not be afraid to ask for help, or to look for resources that can help you keep steady with your goals. Heck, add a comment at the bottom of the page and you might even connect with someone else who may be able to keep you accountable!
There is no budgeting secret or plan that will work for everyone; you need to find what works for you, and do you best. Educate yourself, continue to improve and optimise, and do whatever works best. You don’t need a fancy spreadsheet, 10 different bank accounts, or to eat ramen noodles to have an effective budget; you just need to do what works best for you without sacrificing too much; you’re doing this to be happy, after all.
Drop us a comment below to let us know your tips and tricks to managing your budget!