How to Budget Your Money: Budgeting Tips & Tricks That Actually Work
- Track your spending. This one is a top priority. If you created a budget but aren’t tracking or following it, then it isn’t going to work. Try writing it down or use an app to stay on top of what’s going on with your budget. Having a budget will give you a birds eye view of what money is coming in and what you’re fixed and variable spending is. Always have your expenses equal to less than your income. Create custom text message or email alerts to notify you when you are getting close to or exceeding your budget. Don't let a bad week or two stop you from meeting your savings goals.
- Spend the past not the future. Waiting for your paycheck to come in and then spending it right away can give you the sense that you have no money. When you are spending money you earned last month, you will have less to stress about. Especially if an extra expense comes up or you need to take unpaid time off work. You will have that extra cash as a cushion to help you stay on track.
- Pay yourself first. It is a known trick that if you pay yourself first, aka save when you get your paycheck, you will have better success at building a savings. Otherwise you shell it out to all your bills and may be tempted to increase your variable expenses with what’s left over.
- Automate. Make your financials as easy as possible. If you automate, saving is done for you and takes the effort out completely. You’ll be less likely to use the money as a cushion for overspending if it is already in your savings account.
- Expect the unexpected. Even the best of budgets can be thrown off by an unexpected event. That’s why it’s important to factor in an emergency budget of at least $1,000 and build it up to 3-6 months’ worth of bills. It’s also a great idea to have a sinking fund for expected expenses that come up once or twice a year. The amount tends to be more than you can afford in one paycheck so it is a great practice to divide the expense over the year. These are things like car insurance, dental visits or even gifts. Special occasions can pop up out of the blue and it is important to be prepared. We cannot plan for everything but it is important to get ahead when you can.
- Review your bills. Often we have overlooked charges to our cards that can add up. Be sure to review your bills for any “extras” or try calling your provider to see if they can offer you a lower rate. Check your recurring fees to see what your must-haves are, there may be some superfluous ones you can get rid of. A market watch survey found that “about one in 10 millennials spend $200 or more every month on subscription services.” Speaking of charging large amounts, have you looked at your debt lately? Paying off loans with the highest interest rate and above the minimum payment can save on interest payments.
- Use cash. This may seem like an old-school method but it is a tried and true way to know how much you are spending. Credit cards are very convenient, but it is easier to lose track of your spending. Allow yourself some “fun money” and take out cash for this. Having cash will make it clear to see what’s left and will also help you realize how fast you can spend it.
- Save the surge. If you’ve read our previous blogs then you will see this as a pattern. Save your tax returns, bonuses and even that extra paycheck in the longer months. If you are paid on a bi-weekly schedule, two months of the year will give you 3 paychecks instead of 2. These are easy ways to build savings outside of your normal budget. They are not part of your normal budget and you should already have some splurge money accounted for. Try growing this money with a certificate account.
- Take a day off. Making the effort to have one no-spend day each week can amount to significant savings over time. Some push it a bit farther with a no-spend month to pay off debts. There are many ideas of how to do this, but for most of us, one day a week is more obtainable.
- Be flexible. Budgeting is all about learning from your mistakes and adjusting as you go. No one way works for everyone and that may be why figuring out how to budget baffles many. Your budget may even work right now but will have to be adjusted as financial milestones come up or if any unforeseen circumstances come up that requires additional funds. Such as having a baby or if you simply have a new life goal. But once you get the hang of it, it can feel like you’ve accomplished financial stability.
- Hustle. Have you tried all these methods but are still coming up short? Your best bet to building savings is earning more income. We all want to make more money but asking your boss for a raise every time you get tight on your budget isn’t always an option. This doesn’t mean you have to go work in retail or something you don’t love. Our options are limitless. This can be a temporary job to help you reach a small goal or a long lasting income.
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