Budget. Yikes. Budgeting does not have to be a bad thing, I promise. You mean to tell me I can still travel? Go to dinner with friends or buy that cute shirt I saw? Of course! Budgeting isn’t about making your life a boring drag, instead it is about enabling you to do more with what you have.
What is the purpose of a budget? A system used to estimate the income/expenses of an individual or business. Now, why should that be a bad thing to know how much you plan to spending each month? It shouldn’t. Ever notice, when your money is good everything runs smoothly however, when your money is in disarray everything else feels out of order. Do not feel restricted, budgeting is rewarding and motivating! Let’s explore some simple ways to establish a budget and take control over your finances.
Know your Income/Expenses
One of the most important things to know is where your money comes from and where it is going. If you do not look at your money on an overall basis, it is easy to miss some of the important factors. Do you know what your spending habits are?
Water your Savings Account
Your savings account is like a flower, if you do not water it, it will not grow. Encourage financial stability by having a little extra put back. Not only can you maintain a savings for an emergency but your savings can also be based on things you like to do. Do you like to travel a lot? Or attend a conference each year? Set up separate saving buckets for those special items.
Establish a Weekly Allowance
This is a hard one for many people but it is very effective. Creating a weekly allowance gives you control over your money. It keeps you aware of where your money is going and makes you think twice before making a spur-of-the-moment purchase.
Emergency Fund
An emergency fund is just that, for emergencies. For those unplanned, unexpected, “why the heck is this happening to me” moments that we all have experienced. Being prepared for the unforeseen is a huge part of budgeting. It gives you the freedom to take care of emergencies without sacrificing your budget or adding more debt to your credit cards.
Evaluate Expenses
Look at your expenses. Are there areas that need improvement? Be sure to review your expenses and make sure they accurately reflect your life today. Is that gym membership coming out of your account yet you haven’t been in 6 months or do you still pay for cable but rarely watch it. Reflect on your expenses and find ways to cut back.
Additionally, debt is usually a huge factor. Pay high-interest debt off first. Paying off debt is important. It can be difficult to save when a lot of your savings is going towards debt repayment. But think of the end factor. You will save money on interest and give yourself more money in your pocket once it is paid off.
Review Regularly
Keep your budget visible. It is important to look at your budget weekly, at minimum. This will enable you to reflect on what you were able to accomplish last week, plan for the upcoming week, review your progress and research any discrepancies.
Set Goals & Reward Yourself
Now for the good part. You’ve stuck to your budget and you are continuously accomplishing goals on the way so why not reward yourself for it. The trick is rewarding yourself shouldn’t tank your budget. Find rewards that are motivating to you and that will push you to strive harder to reach those goals.