You are trying to create a budget so that you can save more money. Its no wonder you find budgeting is time consuming. It is hard to continue through.
I get it completely.
Today, I will share some tips that will make your budgeting life easy.
Let’s refresh our memory about budgeting first.
A budget is the allocation of your earning or income in some categories of expenses and savings plans.
Budgeting is essential for every person from a housewife to a manager a company.
If you are earning and spending money, budgeting applies to you.
You might create a budget for four main reasons-
- To save and better money management
- To achieve financial freedom
- To keep track of your money
- To enjoy your life guilt free
If any of the goal resonates you, then you have come to the right place.
Why?
Because I am going to share the best tips to get the most out of your budget.
So, let’s get started.
- Create budget for fun:
When you do something for fun, and with a pleasant mind, the work is done quickly and more swiftly—no exceptions for making a budget plan.
When you make it a burden and hard work in your mind, it ends up becoming a hard thing for you.
And this is true, and this is how human psychology works.
So, make the budget-making a fun time for you.
Do some fun experiment with your purchases.
In one month, you can budget for a night out. In another month, you can fly out to a new place.
These things will inspire you to do the work with interest and enthusiasm.
- Create a flexible budget:
Whenever you create a routine that you need to follow, either a gym workout or diet, you need to make it flexible.
When you have a flexible budget, you can follow it easily.
So, how to make the flexible budget, right?
Just allow few options if you can’t meet the budget strictly.
For example, if you can’t allocate 20% of your income towards your retirement saving, don’t beat yourself up. You can try next month.
Slowly you will adapt to the budgeting.
- Budgeting basics:
You started your budget and planned to follow. But how are you going to make a budget if you don’t know the basic rules?
So firstly, learn the basic rules of budgeting. This will help you to make an effective budget very quickly.
- Budget before the month begins:
Due to procrastination, we leave the task for the last minute, even when it comes to making a budget.
Make it a habit of doing budget each month.
Procrastination will not let you do it. So, make sure you start the budgeting before the month begins.
Start with the budget one / two days before the month ends.
When you make the budget before the month starts, you psychologically become ready for a clean start.
But if you start to make a budget on the first day of the month, it will be a struggle. And, sometimes you don’t feel motivated.
- Set a realistic budget plan:
We tend to overestimate whenever we try to create a budget. As a result, our budget becomes too ambitious.
You can not just make a budget that is impossible to follow.
Create a budget that is practical and achievable. Create the budget in such a way that it seems simple to follow and implement.
Once you have some quick success, you will feel motivated to follow your budget consistently.
- Save for first then spend:
Though you may have been instructed to cut off expenses first and then keep the rest of the money as the savings. When it comes to making a budget, the essential part is the savings plan and retirement plan.
Why? Because these are the things that will make you financially independent.
So, whenever you make a budget, make sure you save first and then spend the left amount.
This will lead you achieve the aim of your budgeting.
- Budget to zero:
Budget to zero illustrates that make every dollar count. You need to use every money you have and allocate it towards different sections.
Every transaction should be included in the budget. Even if, it may seem like an excessive control, but this should be done.
For example, you earn $5,000 each month. $1,000 towards your savings, $1,500 wards your retirement fund. The rest of the amount should go to your expense.
In this method, you are zeroing up your all dollars.
The reason behind this concept is that if you know you have money left and that will make you do unwanted purchases. This will make you distracted from the budget.
- Tools for budget:
There are several tools for budgeting which you can try.
These tools will give you good analytics to show you where do you spend money the most. Where is your income coming from?
If you can’t afford these, you can simply use the excel sheet.
- Track your expenses:
Track your expenses, chances are, you have already heard this sentence a lot of time? Because this is one of the primary and vital steps of budgeting.
You need to track your money, where you are using your money, how you are using it.
And, question yourself that if this expense is worth spending the money or not!
This technique will make you save a lot of money and stop you from making dumb purchases that you do not need to make.
Slowly, you will get a complete idea of your expense.
- Avoid your spending habit trigger:
In many cases, it is noticed that people buy things by a specific trigger. For example, you are in a supermarket shopping for your weekly groceries. All of a sudden, you noticed that there is 50% discount going on winter wares.
You wanted to buy clothes from them for a long time. Now, you feel the impulse to buy from them.
This is called trigger.
Even though you don’t have any budget to buy the clothes now, you are feeling impulse shopping behaviour.
In that case, you can ask a question to yourself- Is it necessary now? Can I delay the purchase? What if I buy it next year?
If all the answers are yes, then just walk away from the store.
If you practice this habit, you will save lots of money.
- Keep some buffer budget:
Man is to err, and as you are a man, you can make mistakes. Marking mistakes are okay, but not being prepared to face them is not preferred at all.
So, you always need to be prepared for any uncertain situation that may arise, even in making a budget.
When you are making a budget, do keep a buffer part. Name the section as miscellaneous and keep the money aside for any buffer you will need to adjust.
You may forget to add a cost in the budget, but it happened to take place. Then this buffer budget will work wonders for you and help you handle the situation.
- Make adjusted plan if needed:
If you use any buffer money or take the loan for your need or do anything that is not mentioned in the budget, do make sure to write down the adjustments for the action.
You cannot just keep it unwritten.
If you do not include the adjustments to the budget, the problem you will face is you would not be able to achieve your budget.
No matter how good your memory is, you will forget about the extra expenses and look for where the loopholes are and where you had spent the money.
- Discriminate wants and needs:
When it comes to needs and wants, often you may get confused. The difference between this two is simple but significant.
The things that you can not do without and must have to live are your need. The things without which you may live, but you will be delighted if you get them are the wants of yours.
Always prioritise your needs first and then your wants.
Your needs should come first in your list, and if you have money left after savings and needs expenses, then you may give the rest money on your wants section and expend to enjoy your desires.
- Pay off your debts:
One of the most crucial traits and importance of budgeting your money is that you get the opportunity and guidelines to pay off your debts.
As soon as you pay off your debts, you will save more. As you would not need to pay any additional interest and this cost of yours can be eliminated.
So, your priority in the savings and expenses part should be to pay off your debts. You should pay off your debts as soon as possible. This brings you an opportunity to make yourself free from burden and bankruptcy.
- Every month is different:
If you are making a monthly budget, then the most important thing to keep in mind is that not every month is the same. Months do vary and so do your budget plans.
You cannot just plan for once and follow it throughout the whole year in every month. This is not how it works.
You need to make a budget every month, depending on the variations. Unless the months have the same expenses and income, you must follow different budgets each month and make it every month.
Otherwise, your efficiency will decrease, and you would not get the best out of the budgets.
- Use a basic worksheet:
While making a budget, you can use a basic excel worksheet to write down the costs and incomes.
This will allow you to make the budget faster, and you can add some formulas and functions in the worksheets that will make things easier and faster for you.
So, get started with a layout that is suitable for you and your budget plan. Use the layout every month to save time and energy. Also maintaining a basic worksheet will enable you to make the adjustments neatly and in a gentle way.
- Mindful of overspending:
It would be best if you are mindful about your overspending money habit on things that you do not need.
You can purchase a thing that can be found at a cheaper rate. Overspending on things is a bad habit. Tackling this habit alone you can save money.
You may list out the expenses and see if you overspent on some items. Are you spending more on local store which you can order online?
Are you spending too much on junk food? Instead, you can prepare foods at home.
- Keep cash with you:
Keeping cash with you would save lots of money spending in your card.
Imagine, you have gone into a store, and you like a phone cover. You have a credit or debit card. You just swapped the card and brought the phone cover. This was not in your budget.
Now, let us imagine another situation. You use cash, and you didn’t plan to buy the phone cover, so you have not brought any extra money. Even if you want to buy the phone cover you can not. Cause you are using cash now that is tangible.
- Automate savings plans:
If you set up a direct debit from your monthly income towards your savings account. Your savings become effortless.
In my bank Account, I have set up a direct debit. As soon as my salary hits my account fortnightly, 30% gets deducted and put towards my saving account automatically.
As I mentioned before, savings plans are essential. Automate your savings plan.
When you get your income, make sure you first keep the savings amount aside and then you head towards your expenses. This is a must for those who really wish to save their money.
You can’t afford to ignore savings plan. Your saving plan is the soul of a budget.
- Set a saving goal:
When you hear about budgets, the word that revolves around your mind is a financial goal.
No, like a mind reading magician, I can tell you find it hard to save.
Hence, setting up a saving goal is very important. If you don’t have any goal, you won’t be able to save any money.
Setting a goal for your financial condition motivates you to make a budget and then pushes you to follow you.
Everything is driven by love and desires. So, it would be best if you had a savings goal for yourself that will push you to sacrifice your goals and desires.
- Save for big goals:
Try to save money for your big goals. For example, when I was planning to buy a house. I knew that I would need to save at least 20% of the house price.
My intended house price was $475,000.
So, I needed to save at least $95,000
Plus, I need to save another $10,000 for lawyers, house inspection and others.
I also need to set aside $5,000 for my saving.
So. Altogether, I needed to save $110,000
I created a big goal of saving this amount.
- Have annual and semi-annual goals:
After creating this annual saving goal of $110,000. I divided that into semi-annual and monthly goal.
I set a mindset that within three years I will save this amount of money.
That means I would need to save $37,000 approximately each year.
That means, I would need to save $18,500 in every six months and $3,084 in every month.
I also noticed that with my existing salary and family expenditure, I can save only $2,200 a month.
This motivated me to get a part time weekend job so that I can save the rest of the money.
It worked for me.
- Find the best savings resources:
You do need to find the best savings and investment resources. You can not just keep your money idle. You invest your savings in the bank or buy gold and real state.
You use the money to make sure this will be beneficial to you in your near future.
There are two options for you to determine your best savings resources.
You need to check the easy accessibility and see if you can handle the investments or not.
Like if you invest in real state, you will need to take care of it. If you invest in gold, you will need to keep it in a bank locker.
- Track your progress:
It would be best if you track your progress at the end of each month. You need to see if you are improving or not. See if your new tricks and tactics are supporting you or making things go diverse.
If you track your progress like this, then it will make you better. You will get to know your weak points and good points.
Also, if you see the improvement in your way, you will feel more motivated to continue the excellent work with more enthusiasm and excitement.
- Don’t be too hard on yourself:
Budgeting makes you sacrifice a lot of things, and it also puts a lot of dos and don’ts’s in your life.
It would be best if you cut off your expenses and wants. Keep your luxury life aside and follow a life that has rules and regulations to follow.
But, never end up being too hard on yourself.
Always remind yourself that you are doing all these things for yourself and your financial independence. This is all about you and achieving your financial goals.
So, you can not attain the main objective of budging if you start being too hard on yourself and make your life feel like hell to you.
- Reward yourself:
One cheat day or month is accepted in your account.
You may allow few rewards or luxuries within your budget. For example, if you can achieve $15,000 savings, reward yourself with a night out. Or a local holiday.
Treating yourself is the most important thing to consider. If you see, you are doing well and making things better at life, so reward yourself.
You deserve the reward for making all the sacrifices to become a better person with a better life with a reasonable and adequate budget.
Conclusion:
Now you have lots of good ideas how to keep the budgeting on.
But, do remember one thing, don’t always try to follow all the tips at once.
Preparing a budget is a habit, you can gain the mastery over the years.
As, at the end of the day, it is about you and your future goals.
And try not to procrastinate while making a budget.
After following these tips, you can create budgets and start achieving your financial goals.
