One of the best ways to take control of your finances is to draw up a weekly or monthly budget. Budgeting is a relatively simple means of keeping track of spending, and it can make all the difference whether you're saving for a deposit for a house or a new car or you're trying to clear debt as quickly and efficiently as possible. If you've recently started budgeting, or you're keen to try budgeting, here are some top tips to take on board.
Budgeting Basics: Getting Started
If you don't already make a monthly budget, it's never too late to start. There are various options open to you in this day and age. Some people prefer to use old-fashioned techniques and draw up their budget with a pen and paper, while others prefer to use apps or spreadsheets. Choose a method that suits you. It's important to update your budget, so interactive software and apps are often a good option.
Budgeting is essentially very straightforward. All you need to do is note down all your outgoings and your income. Many of us have regular payments going out of our accounts. Place these in a separate column or row to one-off payments you expect to cover in the month ahead. Once you've got figures related to your income and all your outgoings, you can calculate how much you have available to save, spend or clear debts. When you have an amount in mind, you can allocate specific amounts to different categories; for example, your weekly grocery shop, socializing or making a credit card repayment.
Once you're up and running, it's crucial to remember to update your budget. This is particularly important if you included estimated figures, you forgot to include a one-off expense, or you've spent more than planned.
Tips to Help You Stick to Your Budget
When you've got a budget, it's important to stick to it. Budgeting can help to prevent overspending, enable you to pay your debt off faster, and give you an insight into where your money is going. Living with a budget isn't always easy, especially if you're not used to tracking every transaction, but it can have incredible benefits. Here are some top tips to help you stick to your budget.
Stick to using cash when you go out
These days, you can buy something in a matter of seconds simply by clicking a button or waving your card over a payment machine. With contactless and instant payments, it can be challenging to keep track of how much money you've spent. If you're going shopping or you're out for a few drinks after work, take out some cash and make that your budget for the day or night. Don't use your card. You don't want to wake up in the morning and find receipts for items you can't even remember buying. If you've got a set amount of cash, and you know that is the only money you have available, this will keep you on course with your budget. If you tend to get carried away or you like to treat others, leave your card at home.
Write a list for your weekly grocery shop
How often do you go to grocery store and add a load of stuff you didn't need to your cart? We're all guilty of impulse buys, and all too often, we're swayed by advertising banners and special offers. If you tend to overspend at the store, plan a menu for the week, write a list and only buy what's on that piece of paper. If you find it hard to resist bargains or you find yourself reaching for items that are discounted, consider shopping online. This way, you can add your list to your cart very quickly and easily, and you'll also have a running total at all times. Often, when we freestyle at the supermarket, the total is much higher than expected when we reach the register. With a visible total, there's no risk of this happening. When you're shopping, it's also a really good idea to shop around for low prices. If you're buying items in bulk like diapers or pet food, for example, you could save a lot of money by choosing one retailer over another. Planning ahead is also key. If you don't have enough food in your fridge, you might end up ordering in or popping out to a convenience store, which is likely to cost you more.
Keep an eye on your accounts and track spending
Are you one of those people that never check their balance or ignore written statements? If so, now is the time to break that habit. If you don't look at your accounts on a regular basis, you might be surprised when you do try and take money out or you look at a statement and find that your balance is a lot lower than expected. Checking on a regular basis can lower the risk of overspending, and it will also alert you to any problems linked to security and fraud. Use Internet banking to track spending on the go and manage your accounts, and look into apps that are designed to make it easy to keep a tight grip on your wallet. There are several apps available via the App Store, and most are free to use. Using online banking and/or an app to stay on top of your accounts and spending will become an invaluable habit that will serve you well.
Ask yourself if you need to make a purchase
Many of us buy things that we don't need on a regular basis. If you've got plenty of money, this isn't an issue, but if you're trying to stick to a budget, or you're in the process of paying off debts, eliminating unnecessary expenses is always a good idea. If you're tempted to buy something, ask yourself if you really need that item. If the answer is no, put it back, and come back to it a later date if you still want it and your financial situation is a little rosier.
Filter your inbox
We're all familiar with marketing emails. These emails are designed to hit us hard when we're at our weakest. It's 2 pm on a Friday. You get an email from your favorite restaurant. You're trying to save, but that email makes you throw caution to the wind and book a table for 8 pm to celebrate the fact that it's the end of the week and you deserve a nice meal and a glass of wine. Another scenario. It's Sunday evening. You're not looking forward to a busy week at work. How do you make yourself feel slightly better about your alarm going off in the morning? You treat yourself to a new top that will be there waiting for you when you get back from work. Sometimes, it's great to be bombarded with offers, rewards, and discounts, but temptation is not what you need when you've got a budget in mind. If reading emails gets to you, apply filters, consign them to your junk folder, and ignore anything that isn't relevant to you.
There's no point in creating a budget if it's not realistic. Budgeting should enable you to cover all your costs and survive from one payday to the next. Make calculations based on what you can afford. Don't leave yourself with $20 for a week's food or expect to cut your energy bill by 50% simply by switching to LED bulbs. Give yourself enough spending money to cover the essentials and save what you can without running yourself into the ground. Avoid trying to live on nothing. If you do this, there's every chance that temptation will get the better of you.
Find cheaper ways to have fun
How much money do you spend every month on socializing, hobbies, days out or vacations? If you're trying to make cutbacks, luxury items are usually the first thing to go, but this doesn't mean that you have to put a stop to the fun. There are many ways you can enjoy yourself without spending a fortune. Think about options like replacing a meal at a restaurant with an informal, bring your own bottle dinner party at home or swapping a monthly trip to the movies for a DVD and snacks on the couch. Look for offers on days out such as free child tickets, and consider activities that don't cost anything. A day at the beach, an afternoon in the park, trips to museums and galleries and nature walks are great ideas for families on a budget.
Budgeting is an incredibly useful tool for people who are keen to maintain a firm grip on their finances and those eager to get out of debt. When you have a budget, this can help you track and monitor your spending and it can also teach you to live within your means and cut down on unnecessary purchases. Once you have a budget, the next challenge is to stick to it. Use apps to track spending, check your balances on a daily basis, take cash out with you, and always write a list when you go to the grocery store. Explore cheaper ways of having fun and socializing, apply filters to your inbox, and be realistic when setting your budget.