10 Quick Tips on Budgeting
If you have ever found it challenging to stick to a budget, you’re not alone. According to a recent Bankrate survey, 65% of Americans have less than 10% of their income saved for the future, while 19% have nothing saved at all. Budgeting helps you save for emergencies, pay off debt, and even plan for retirement. It helps you achieve your financial goals and objectives.
Budgeting doesn’t have to be difficult. By making a few adjustments here and there, you can achieve your idea of financial success. So, if you are struggling to stick to your budget and making saving a priority, here are a few quick tips on a budgeting.
1. Establish detailed goals
What’s the point of creating a budget if you don’t have goals? Goals help you stay on track. You wouldn’t get in the car without a destination in mind, would you?
Before you develop a budget you need to write down your goals. Be as detailed and specific as possible. Develop short-term and long-term goals. You should aim to complete your short-term goals within a year and your long-term goals in a year or more.
Be sure to write down your goals and look at them daily. This will help you remember what you’re working toward. It will also help keep you motivated and dedicated to your budget.
2. Track spending habits
Try tracking your spending habits for a week or more. This will give you a great idea of where your money is going and bring light to any negative financial habits you may have developed. This will help you make positive adjustments to your budget.
Tracking your spending habits can be a very eye-opening experience and help you change your financial habits for the better.
3. Prioritize saving
Before you pay any bills, try saving. With so many American’s not prioritizing saving, you wonder why it may be so challenging. They are simply not paying themselves first. If you don’t have an emergency fund of 3 to 6 months of your expenses, this may be a great place to start.
If you feel as though saving 10%-20% of your income is unreasonable, start with a smaller amount and increase it by a percentage every month. After a while you won’t even know it’s gone. It will become one of your financial habits.
4. Use your plastic
By using your credit cards, you can see exactly what you are spending your money on. It shows you all of your transactions and may categorize them depending on how you have your account set up.
The other benefit to using a credit card to monitor your transactions, is some credit cards offer various rewards. If you decide to use your debit card, make sure you will not accrue any fees.
5. Attempt a money challenge
Money challenges are a great way to amplify up your savings and help you adjust your spending habits. They encourage you to take a look at the way you’re spending money. There are countless money challenges you can try.
Some of these challenges include no-spend months or investing your spare change. Do some research and find some money challenges that will fit your lifestyle and goals. Try soliciting your friends and family to join you in the money challenge you select. Working on a money challenge with your friends and family will be 10X more enjoyable than going at it alone.
6. Take a crack at the 50/20/30 plan
If one of your biggest budgeting struggle is staying organized, the 50/20/30 plan may help you stick to your budget. This plan breaks your budget down into 3 categories: fixed expenses, goals, and flexible spending.
- 50% of your income should go toward your necessities and fixed expenses. These expenses would include utilities, rent, and health care.
- 20% of your income should go toward your goals. This would include your retirement savings or repayment of credit card debt.
- 30% of your income should go toward miscellaneous expenses. This could include entertainment, eating out, or planning a vacation.
7. Find the right tools
Using a pen and paper to record your budget can become tedious. It also gives you room for error. Using a budgeting tool can help you review your spending habits and watch the flow of your funds into your various budgeting categories. Some budgeting tools even send you motivational reminders to stay on track.
An example of a great budgeting tool is Spendee. With Spendee you can take control of your finances, monitor your transactions, track your cash flow, understand your financial habits, and more. It’s almost as if you have a budgeting companion with you at all times.
8. Discover your own budgeting style
There is not one way to manage your budget. Everyone has different financial needs and goals. Discover the budgeting style that is right for you. Here are a few budgeting styles you could consider:
- Envelope system: With this method, you create an envelope for each of your budget categories and fill it will the cash. You only put the amount of cash you wish to spend on that category. Once you are out of cash, you can no longer spend in that category. You can use digital envelopes for your fixed expenses if need be.
- Reverse budgeting: If you have a goal you are serious about accomplishing in a short amount of time, you could try reverse budgeting. This method allows you to focus on a single goal. You prioritize this goal and pay for your bills with the money you have left over.
- Zero-base budget: This method gives every dollar you earn a job. You tell your money exactly where to go and how you will spend your funds. If you were to save and spend all of your money every month, you would be at zero.
9. Work together with your partner
Creating and sticking may be easier if you work on it with your partner or significant other. Working as a team with your partner can not only help you stay on track but it can add some fun to this mundane task.
The more positive financial habits you build together, the easier it will be for you and your partner to accomplish your financial goals.
10. Make adjustments when necessary
Life happens and expenses come up. You never know what each month will bring. It’s okay to make adjustments in your budget to accommodate for extra expenses or changes to your lifestyle. Having a little cushion in your budget can help make these adjustments more seamless.
At the end of each month review your budget and determine how you did. Did you spend more cash in one category? Did you have an unexpected car accident that you needed to use some of your emergency funds and need to save more next month? No matter where you end up at the end of each month, evaluate your budget and make sure it’s still realistic.
The bottom line
Budgeting doesn’t have to be challenging. There are plenty of ways to make it enjoyable and get you on the right track to achieving your goals. Find what works for you and your lifestyle and you will be on step closer to financial success.
This piece was written by Ashley. Ashley is a personal finance writer and content creator. In addition to contributing to Spendee, she writes for solo entrepreneurs and Fortune 500 companies. When she’s not calculating her net worth or reading the latest personal finance book, you can find her shark diving in South Africa. You can follow her on Facebook, Instagram, Twitter.