There are a lot of good reasons to create a budget and stick to it. You may want to save money for an unforeseeable emergency, a long-term goal or retirement. A budget can help you achieve all this — if you stay with it. Here are a few budgeting tips to help you keep on track.
Make Sure Your Budget Is Realistic
It’s a good idea to review and tweak your budget occasionally. If your goal is to save 15 percent of your income each month, but you only have 10 percent left over after paying your regular bills and some discretionary spending, make some adjustments. Consider freeing up some money toward savings by cutting back on a “luxury” item in your budget or by taking on a little extra work.
Control Your Shopping
An easy way to get a handle on shopping is to hit the store with a list in hand of what you’re there to buy, whether it’s groceries, clothing or household goods. Having a list gives you two options when you spot something you just have to have.
Option one is to simply leave the store without making that purchase and never look back. If that sounds too stringent, try option two — leave without it and give yourself a set period of time to think about the purchase. If you still really want it or think it’s a great deal the next day, look for a way to pay for it from your discretionary spending allotment. Can you compensate for the purchase by cutting back on entertainment? You may also want to shop around in case you can find the desired item elsewhere for less.
About Those Credit Cards
Financing a purchase has its place and can be accommodated in a well-planned budget, particularly for a big-ticket item that you legitimately need now and don’t have time to save for. But when it comes to using credit cards for daily expenditures, think about it first. It’s easy to charge more than you planned for when you’re only using plastic.
Instead, consider putting yourself on a spending allowance each week or pay period and pay yourself in cash. When the money is gone, it’s gone, even if you still have two more days left until payday. This might feel a little odd until you get the hang of it, but eventually you’ll be looking down at that $10 bill in your hand and thinking, “How am I going to get through until Friday if I spend this today?”
Switch Things Up
A lot of people deposit their paychecks into a checking account. They pay bills according to their budgets, then move what’s left to a savings vehicle. Consider switching things around to avoid the risk of not getting to that savings part. Put your paycheck into savings, then transfer money to checking in an amount that’s commensurate with your budget, leaving the balance. If you stop spending when your checking account balance gets low, rather than making another transfer, your savings will grow.