Budget. The word, admittedly, sometimes makes people cringe. We tend to think of it as something holding us captive from enjoying life. However, a budget is a great way to make sure you are being responsible with your money and having fun at the same time.
Recent increases in the price of gas, food, and just about everything have created the need for a budget overhaul. So, where to start? According to The Balance, a website geared toward explaining the ins and outs of finances to all of us average Americans, there are a few easy steps to follow:
- Gather all financial statements
- Calculate your income
- Create a list of monthly expenses
- Determine which expenses are fixed and which are variable
- Total your monthly income and expenses
- Adjust expenses
Sounds easy, right?
It is mostly basic math, but, as we know, it’s easy to write down your budget goals and much more difficult to follow them. A simple trip to the store could end up costing you big time if you give in to whims here and there. But on the flip side of the coin, it is so nice to be able to purchase something that you really like. Mainly, the tension exists in wanting to save for the future and live life to the fullest. So, how do we manage to do both in a world of rising living costs?
Make a commitment
Whether you are saving for retirement, kids’ college, a new home, or that dream vacation, you must make the commitment before you will see the results. This first step, although it may seem obvious, is incredibly important in creating a budget and sticking to it. Tell your partner, family, or close friends your plan so you have someone to be accountable to. Set a goal for yourself that is both attainable and a bit challenging. Remember your why in your moments of weakness when you want to drop your paycheck on that fancy new tech toy.
Track your spending daily or weekly
If you want to build better financial habits, including understanding your budget, get used to tracking your spending on a regular basis. Daily is ideal, which means taking time in the evening to write down all the money you spent throughout your day. This will show you, in a rather obvious way, where your money goes and may even cause you to behave differently in how you spend your money. Will you purchase that second Starbucks drink of the day if you must write it down later?
Give yourself an incentive
We all remember the sticker chart, either from our own childhood or recent parenting experiences. Human brains respond well to rewards, so use that to your benefit. Is there something you really want to do with your spouse for a fun date night? Work together to save money and once you hit a certain target, reward yourselves. Do you really love eating out once a week? Make it a reward for yourself after a week of great budgeting.
Don’t be afraid to turn techy
Need some help keeping track of things? If you want more than pen and paper or even your computer’s spreadsheet capability, then check out a budgeting app. Mint is available for the iPhone, whereas both Budget Tracker and Budget Pulse can help you keep track of your money on both Android and Apple platforms. Some apps will require banking information while others rely on you to keep track of certain spending. The best thing about letting technology work for you is that your budget will always be at your fingertips. No more wondering how much more money you must spend on eating out this month!
Everyone’s budget will look different, which is why it is important to sit down and create your own personal spending goals. The hardest part, however, comes in the form of follow-through, especially when you are tempted to spend more money than your budget allows. Remembering long-term goals versus short-term satisfaction can help you get back on track to handling money responsibly.