#Adulting: 9 Budgeting Tips and Tricks That Will Get You Back on Track
Budgeting is one of the life skills that would be most beneficial to learn in school. Unfortunately, most of us enter adulthood clueless about it. Some of us are only forced to start budgeting after negative experiences such as getting our cars or homes repossessed.
Financial admin and budgeting are painful activities for most adults. But it doesn’t have to be this way. Budgets are a great tool that can help you achieve goals such as buying a home or taking a dream holiday.
Technology has made it easy to create and stick to a budget that works for you. Keep reading for 9 budgeting tips and tricks that will get you on the path to financial freedom.
1. Start With a Compelling Reason to Budget
For your budget to work, you must have a strong reason to stick to it even when times get hard. If we create a budget just because it is something we are supposed to do, we become more susceptible to temptations. So, one of the best budgeting tips and tricks is to decide why you must budget.
This could be for a fun reason such as to save for a nice car or vacation. It could also be a practical reason like paying off your debts. Make sure everyone is on the same page about why you must all follow the budget if you’re budgeting as a couple or family
2. Switch Your Mindset
Many people associate the word budget with pain. If this is you, then consider calling it something more positive like a spending plan. This will increase your excitement around the budgeting process and encourage you to watch your spending.
3. Use Zero-based Budgeting
Zero-based budgeting is a method that requires you to assign all the dollars you earn somewhere. You do this by adding all your sources of income and then listing all your expenses.
Your income should cover your expenses. Put any surplus towards a financial goal such as savings or paying off debt.
4. Be Realistic
One reason budgets don’t work is that we are often unrealistic about our spending habits. Before creating a budget, it is best to track all your spending for at least one month. Knowing how much you spend on each category will enable you to create a budget that you can stick to.
Do review your spending and see whether you are overspending on some items. For instance, you can do without the daily coffee from your favorite café. Cutting non-essential spending will give you more money to play with to cover other budget areas.
5. Personalize Your Budgeting
Another important budgeting tips and tricks is to use a method that works for you. There are many types of budgets as well as budgeting programs to choose from.
Some people work better by recording every single expense while others prefer more leeway. Some prefer notebooks or spreadsheets whereas others prefer mobile applications.
There are different ways to divide your income too such as Harv Eker’s 6 jar method or the 50/30/20 method. Use whatever makes it easy for you to stick to your budget.
6. Know Your Needs From Your Wants
Effective budgeting requires that you differentiate your needs from your wants. Needs are essential items that you can’t live without such as shelter and food. Wants are non-essential items that you desire but it wouldn’t be a catastrophe if you didn’t get them.
For instance, it would be understandable to take a quick loan to pay for overdue rent. But you probably shouldn’t use quick loans to buy the latest iPhone if you won’t have the money to pay it back on time. Going into debt because of wants is a common mistake that you can avoid through proper budgeting.
7. Create a Cushion for Unexpected Expenses
Life is full of surprises which is why budgets can never be perfect. An unexpected expense like a car repair often throws off many budgeters and makes them give up on budgeting. If your budget fails one month, take it in stride and stick to the plan instead of starting to spend indiscriminately.
Every month put some spare cash towards an emergency fund that you can turn to whenever you get an unplanned expense. This will help you avoid using your credit card or taking up debt to pay for emergencies
8. Set Up Automated Payments
Automated payments are another great aid to effective budgeting. If possible, set up automated payments for your essential expenses such as rent or debt payments. This will ensure that even if you run out of money, your needs are already taken care of. Automated payments also allow you to take care of your obligations without having to think about it.
Don’t forget to check your automated payments every few months to see if you still need to pay them. Take out those that you no longer need such as streaming applications that you no longer use.
9. Assess Your Budget Monthly
Your income and expenses will vary from month to month so you need some time at the end of every month to create your budget for the following month. Review the previous month’s budget and recycle any elements that will remain the same in the new month. Each month will have one-off expenses such as Christmas shopping or an insurance payment.
Plan for these in your monthly review. From your budget review, you may notice that your income won’t be able to cover your anticipated expenses. This may lead you to take out a loan to cover the shortfall.
Use the Best Budgeting Tips and Tricks for Financial Success
Budgeting is a life skill you must learn if you want financial success. For many of us though, budgeting is a painful process that is hard to commit to. These 9 budgeting tips and tricks can help you stick to a budget.
If you’re currently in a financial jam and want to know how we can help, don’t hesitate to contact us today.