Budgeting can be tough but it is an essential tool to help you improve your financial life. As we start a new year, I always find it helpful to review some of my favorite budget tips to help keep my finances on track.
Find A Budget That Works For You
Those who don’t budget think that all budgets are the same. That couldn’t be further from the truth. There are many different types of budgets you can choose from and they range wildly in how they work.
If you have trouble sticking to budgets, you may want to try the cash envelope method which only allows you to spend the cash you have on hand. If you’re a super detailed person, a line by line budget detailing every expense may work best for you.
However, if you just want to have a basic budget that allows you to track your spending but doesn’t bog you down in the details, try the 50/30/20 budget which allocated 50% of your expenses to needs, 30% to wants and 20% to saving and paying down debt.
Be Realistic With Your Budget
The second of our budget tips is to be realistic with your budget. If you don’t create a realistic budget from the start, you’ll have no chance of sticking to it. You must be reasonable with both your income and expense categories both in total dollar amount and in making sure you don’t forget to include irregular income and expenses.
Most people get stuck on reducing their expenses too far or too fast and it ends up backfiring by creating a goal that cannot be reached. Another downside is super strict budgets make many feel like they’re missing out on life. These two problems cause most people to get frustrated and go back to their old ways which results in their finances never getting back on track. Don’t fall victim to this common budgeting problem.
Get Back On The Horse As Soon As Possible
Everyone has a bad budget month from time to time. Just with many other goals, it is important that you don’t let this minor setback completely knock you off the horse forever. Instead, dust yourself off and get right back to budgeting. A new month provides a new opportunity to meet your goals once again. Once you have another great budgeting month, you’ll feel better and your finances will continue to improve.
If you’re feeling particularly bothered with spending more than you planned, consider trying to replace that money by working more in a future month to offset that extra spending. The other option is to reduce your spending in future months to make up for the shortfall. Even if you never replace the money, as long as you continue to spend less than you earn in future months most people will be just fine even with a minor setback.
Not All Budget Problems Are Expense Problems
One of my favorite budget tips is one that doesn’t get shared often enough. If you’re having trouble sticking to your budget, you might not have an expense problem at all. You may have an income problem.
Depending on where you live and how much money you earn, it simply may not be possible to financially thrive on the amount of money you earn each month. To fix this problem you can either find a higher paying job that pays more per hour or work more hours to earn more money.
These four budget tips should help you in 2015 to either get started with your first budget or to keep your current budget on track. Just remember, even the most simple budget beats having no budget at all.