5 Secrets to Sticking to a Budget

Budgeting is like dieting – some people have it down pat, while many others know this is something they should be doing, but continue to push off. With that being said, budgeting is key if you want to take control of your financial life. Below are 5 tips I have to help stick to a budget.

#1 Have a goal

Having a g811oal is mind is important to sticking to your budget. If you are saving money just to save money, going over budget is not a big deal. However, if you are saving money to buy a new car, go on a vacation, build an emergency fund or anything else that you want/need then it is a lot easier to stick to your budget.

#2 Know your income + necessary expenses

Go through your income and calculate how much you bring home after taxes. Now calculate your necessary expenses, meaning all the money you spend that your life would take a serious hit if you did not pay. Rent, car/loan payments, electricity, water, gas are just a few. Separate the nights out, clothing, gadgets, dining, and all unnecessary items.

Subtracting your income from your necessary expenses gives you an idea of how much you COULD save. Of course, it would be nearly impossible to save all of that money, but set a percentage or dollar amount you would like to save from that.

#3 Have a timeline

Setting a timeline makes you hold yourself accountable. I would recommend budgeting on a monthly basis since that is usually when your major bills are due (rent, phone, car, etc.). Maybe your goal is to save $1,000 in 5 months, or to save $300 in a month, either way have a timeline that you can see in the future.

This is similar to losing weight. If your goal is to lose 5 lbs in two months, as opposed to just losing 5 lbs it is easier to accomplish with a set deadline.

#4 Use cash

CUSDredit/debit cards make spending money a lot easier as you don’t see the money physically leave your possession. Using cash can bring spending down. I’ve seen studies showing it decrease spending by over 10%. Once you run out of cash you cannot spend anymore, unlike credit cards which will allow you to overspend easily. Set a weekly or monthly amount of spending cash. Use this for everything – groceries, clothing, coffee, etc. If you buy stuff online, take that cash equivalent to what you paid for and put it back in the bank. Knowing you have a weekly or monthly allotment of cash will give you a sense of where your money is going.

#5 Set up automatic deposits into your savings account

Whatever the amount of money you want to save is, have it automatically pulled into a savings account. You can do this from your bank, or from your paycheck. Either way this will enforce you to stick to your goals. Of course, if an emergency comes up you still have that money accessible by transferring it back into a checking account. Yet it would be hard to justify to yourself to move over money from your savings account for something that isn’t necessary.

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