11 Practical Ways To Make Your Budget Actually Work.
So by now you realize you need a budget in order to successful manage and grow your money. You’ve probably even downloaded an app (or two) and made a spreadsheet.
You’ve meticulously gone through your bills. Payday comes. Now what?
Do you stick with your budget or do you cheat, hoping that everything will work out okay in the end?
Let's state the obvious that budgeting is hard.
Even for the best of us.
But it doesn’t have to frustrate you and be so complicated that you quit before you ever really get started.
You have to give budgeting a chance to work before it will actually work.
And here are a few practical ways to do that:
- Admit you have a problem -- Everyone has that one vice. Maybe it’s coffee every day. Cigarettes. Drinks after work. Maybe you have a shoe problem and go shopping every time you’re stressed. Maybe it’s Taco Tuesday or “I don’t want to cook” pizza twice a week. Whatever “it” is, identify your bad money habit and admit that you need to cut back. If you need to get an accountability partner for this, I’d suggest you make the call now. It will help in the long run.
- Cut yourself some slack the first time you try -- Your first month’s budget likely isn’t going to pan out exactly as you imagined. It will take a month or two to figure out exactly how long that paycheck will last, where you need to cut back and how much of a stash you need to keep on hand. Practice makes perfect. So don’t get discouraged just yet. Make an honest effort and work from there.
- Allow yourself some flexibility -- If you didn’t make as much as you’d projected on your budget, look at where you can cut back and do so immediately. And if you surprise yourself and make more than you expected or get that bonus you’ve been waiting on (but not counting on), don't splurge. Instead, make a wise investment or put it in your savings account.
- Overshoot all your expenses when planning -- When budgeting, overestimate your expenses. Like the old saying goes, “better to have it and not need it than to need it and not have it.” After a few months, you will see what the real averages are and can adjust your budget to reflect the real numbers. It's pretty demoralizing to realize that you're broke just when you have unexpected needs.
- It's not a budget if you don't list it all -- Think about everything you spend money on -- from condoms to chewing gum to happy hour to baby diapers. Your life is full of surprises. Make sure you are accounting for all of your bills -- and the different ways that you spend your money. The required ones and the miscellaneous. Write down every single dollar you spend.
- Don’t take money from your savings for any reason -- Your ideal budget will include a monthly amount for your savings. Make sure to continue to keep that money safe. If you need to cut from other areas to keep your hands out of that account, then eat out less, or cut your entertainment or clothing allowance if you must. But leave your savings alone.
- Review your monthly expenses each month -- Even if you are "sure" nothing has changed, you need to review your budget monthly. Because things do change. For example, your electric bill if you live in a colder climate will be higher in the winter months when it is freezing cold. Your medical expenses will be more at the beginning of the year before you meet your deductible. Adjust accordingly.
- Plan your splurges -- It’s unrealistic to go years or even months without splurging a bit. Plan for the splurge. Figure out when you’re able to and how much you can afford -- and then go wild. Or as close to that as possible. You should be able to reward yourself for a job well done or when you hit a savings milestone.
- Make sure you’re getting the most out of your money -- Check around for banks with higher return rates or free checking or savings accounts. Sure you might be loyal to your bank, but this is about making money. It’s not personal. Finding a free checking account when you’ve been paying $5-11 per month will add up (to $60-132 per year to be exact). That’s money you can put in savings. Or use to splurge.
- Make it more difficult to spend money -- It’s easy these days with all the electronics and the apps in the palm of your hand to spend more money than you have in your budget. Try moving your savings account to another bank. Pick a place on the other side of town. Skip the bank card. Skip the app. If you need to take money out of savings, make sure you have to drive out of your way to get the money.
- Have a goal that is bigger than you think is possible -- Make sure you have clearly identified what you are working towards-- a new car, house downpayment, wedding, honeymoon, divorce, vacation. Always keep the goal at the forefront of your daily routine so that you will be less likely to deviate from your planned budget.
Budgeting isn't about doing with less. It's about building a life that works for you.
It's about being purposeful with one of your greatest assets -- money.
Like everything you ever tried to do and hated at first, budgeting will get easier. It will become a habit.
Follow the guidelines above. Put up reminders of what you are striving for.
The reminders can be pictures on the fridge. Love notes to yourself. Whatever you need to do to stay on track.
And when all else fails, check in with a friend.
Not everyone budgets, if your friend doesn’t, maybe they will join you. If your friend does budget, then they can give you tips and tricks and help you stay the course.
If you want it bad enough, there is no limit to what you will do to make it happen.