How to Stick to Your Budget Like Super Glue
Budgeting is the process of creating a plan on how you will spend your money. The spending plan you create is a budget. In order to stick to your budget, there are some things you need to do in order to reach your financial goals.
Best Ways To Stick To Your Budget
When you are figuring out how to stick to your budget, there are a number of different tips and tricks you can use. Not every trick may apply to your situation but the more you learn, the easier it will be to figure out how to stick to your budget.
1. Leave the Credit Card at Home
Credit cards can make it really easy to overspend since you don’t actually see the money trickling away like you can with cash. When you aren't thinking about the money, it can be harder to stick to your budget. Before you know it, you have a huge bill for little things, like lunches, and maybe some unexpected splurges. Make it harder to overspend and leave the card at home.
2. Keep Your Budget Real
One of the reasons it’s hard to keep your budget is because you aren’t being realistic for your needs. If you give yourself $100 to spend at restaurants every month but are consistently going over that then something has got to give. Go ahead and cut back on other areas but budget more if you can. The closer you can get your budget to your reality, the easier it will be to stick to.
3. Set Up an Auto-Draft
This is one of the easiest ways you can save for a big goal and it helps you stick to your budget. Set up an auto-draft so the money goes straight into another fund. This way you aren’t going to be accidentally spending the money you have set for something else.
4. Consult the Social Calendar
It’s fun to celebrate big events with your family and friends, such as weddings and anniversaries. However, sometimes it can be hard to remember to budget for them. Before you create your budget, look through your social calendar to see what is coming up in the next few months. If you don’t have a social calendar, now may be the time to create one. It shouldn’t take you long and a little organization can really do wonders for the budget process.
5. Wait It Out
If you are window-shopping and see the perfect thing you need to add to your closet, don’t buy it yet. Tell yourself you can buy it but not until next month. Then you should have enough saved up, or you will decide you don’t want it that much after all. A little waiting can help you make sure it’s not an impulse buy.
6. Stick to a Grocery List
Grocery shopping is an easy way to blow your budget. The advice to never shop hungry is true for a reason. If you are trying to stick to your budget, now is not the time to get adventurous with new ingredients. Stick to your grocery list and compile a grocery list based on your household needs. To make a grocery list easier, plan out your meals for the week, including snacks, breakfast, lunch, and dinner.
7. Stop Wasting
It’s easy to waste a little with leaving the lights on or tossing things like the toothpaste out before its totally empty. If you start being a bit stingy with things, it’s easier to save money. Use the last scraps of what you purchase. Don’t leave taps running and don’t throw out a quarter of the plate of the dinner you didn’t finish. You don’t have to go full-on thrifty and cheapskate, but simple changes can make a big difference in your finances.
8. Find an Accountability Partner
If you have done everything you can in order to stay on budget and find yourself overspending each month, you can find an accountability partner. If you are married, you have a built-in partner with your spouse. If you are single then ask a family member or financially savvy friend. Ask them to help you create and stick to a budget that fits into your lifestyle.
9. Make Required Payments on Time
Missed payments and late payments can have harmful effects on your credit score. This can lead to late fees, dropped insurance, higher interest rates, repossessed cars, and you can even get evicted. Be sure to make all your payments on time to avoid these bad outcomes.
You can create a calendar with the required payments listed a few days before the due date to allow for electronic funds to transfer or mail transit. These payments you should be paying attention to include your mortgage or rent payment, insurance premiums, student loan, and credit card payments, and car payments.
10. Build Up Savings
When you first start a budget, you may not have savings built up. However, as soon as you get a budget under control, this should be at the top of your financial goals. When you have savings built up, it makes unexpected expenses that come up much easier to handle. This could be a repair, major medical bill, or getting through a job loss. This helps keep you from blowing your budget by using your credit cards. When you do dip into your emergency fund or savings account for unexpected expenses, be sure to replenish it. This way you can still keep saving for other life goals.
Reasons To Have a Budget
Now let’s explain why you should create and stick to a budget. There are numerous reasons for that.
Set Your Goals
Budgets can help you figure out your long-term goals and help you work toward them. If you are just drifting through life and tossing out every penny then you won't be able to save to put a down payment on a house or take that vacation you have always wanted to.
Stop Spending Money You Don’t Have
Too many people are spending money they don’t have, thanks to credit cards. Budgets can help you ensure you don’t spend money you don’t have.
Save Up for Your Retirement
Budgeting can lead to a happy retirement if you build investment contributions into your budget and set aside a portion of your earnings. Although this may mean you have to sacrifice a little bit now, it’s going to be worth it down the road.
Create an Emergency Fund
Budgets can help you prepare for emergencies and life is always full of unexpected surprises. Budgets should include emergency funds to have at least three to six months of living expenses to make sure you don’t spiral into debt after a crisis.
End Your Bad Habits
When you build your budget, it can help you shed some light on bad spending habits. You may be spending money on things you don’t need, such as a costly extended cable plan you never use. Budgeting can allow you to rethink spending habits and help you refocus on your goals.
How to Create a Budget That You Can Stick To
There are three main steps to create a budget. You first need to identify how your money is being spent, evaluate those expenses to see how they work with your financial goals, and then cut or track expenses to stay within any guidelines. It sounds pretty simple but that’s usually not the case. The reality is that many people find it hard to budget. Many try to suddenly cut way back or eliminate expenses from just about every category. This is similar to staying on a crash diet forever and it’s just not possible. In order to be able to stick to your budget, use these tips to create a reasonable one.
Start with After-Tax Income
Look at your paystub in order to figure out what you take home on payday, what goes toward taxes, and what you pay for health insurance. Don’t count on money that you may not receive, such as year-end bonuses or tax refunds.
Track Your Expenses for Two Months
You can write down every purchase you make in a notebook but this can get tedious. One of the easiest ways to do this is to download the last two months' worth of credit card and bank statements. Then put each purchase in a category, such as groceries, health insurance, childcare, or clothing. You can also download an app to your phone that can help you track and categorize your expenses while you are on the go.
Evaluate Your Expenses
Now that you have an idea of where your money is going, it’s easier to see where you could be spending less. Your goal with your budget should be to reduce spending to under 90% of your income and then save the rest. If you are unsure where to cut, look at some problem categories first. It could be easier to focus on one or two large expenses, such as sports season tickets, or you may find that trading in an expensive car for a cheaper one works better. Some like to trim back on small expenses, such as buying coffee every day.
Revise Your Budget As Needed
In order to stick to your budget, you may need to revise it at some point. Continue to track expenses to see if you are staying within your limits. You may discover that some of the goals you have are unrealistic. It’s okay to ease into them slightly or change some categories. It can take two or three revisions to find a budget you can realistically stick to.
Why It’s Important to Stick to Your Budget
No one can force you to stick to your budget but it’s important. Everyone budgets for a reason. This can be your "why." The why looks different for every person. Finding your why is the key to help you make the right decisions with your money.
Perhaps it’s the feeling of security and peace you get with a budget. Maybe you want to teach your kids ways to manage money. You may even have some big money goals you want to fulfill and you need a budget for that. Be sure to tap into your personal why and keep those reasons close by when you are working on your budget and to help you stick to your budget.
Why It’s Easy To Overspend
One of the reasons it can be hard to stick to a budget is because it’s easy to overspend. There are a number of reasons why it’s easy to overspend and there are also changes that can be made to fix these habits.
Buying on Impulse
About 76% of an average shopper’s spending choices are made in snap decisions and more than half of shoppers end up spending more money than they had originally planned. In-store decisions are vulnerable to many in the moment variables.
For example, if you are hungry then you are more likely to spend more at the grocery store. Be sure to stick to any shopping list. If you want to avoid spending too much then use cash and only carry the amount you have decided to spend ahead of time at the store.
Using Credit Too Often
When you are counting dollar bills before you make a purchase, you are very aware of how much money you are spending. However, when you pay on a credit card, it’s much easier to forget. You don’t even really have to look at the total before you sign your name. This is why it’s easy to overspend when you rely on credit cards. Be sure to pay off your credit card balance every month and don’t use more than a third of your credit card limit, in order to protect your credit score.
Underestimating Little Expenses
Many people can easily tell you what they pay for utilities, car payments, rent, or other big expenses per month. It’s the little expenses, such as gas, coffee, and take-out food, that can sneak up on you. In order to limit the effect of little purchases, write down expenditures.
Not Having Enough Savings
Without savings, what you supposed to do when you need sudden home repairs or the car breaks down? When these things come up and you don’t have any savings then you are either reaching for the credit card, trying to get a loan, or taking away from other priority needs, such as utility bills and food.
In order to fix this, put 10% of your take-home pay into a savings account each month. At the end of the year, you should have about one month's worth of your salary stored away, which can help you get a jump on an emergency fund. This is also why it’s helpful to have an emergency savings fund worked into your budget.
You Want to Be Part of the Gang
Since humans are social creators, it can be hard to say no when your coworkers are going out for drinks after work or your friends want to all spring for a pizza. It can be easy to fall into a habit of judging your own spending habits by looking at what your friends are doing. If the woman who shares your work title and your cubicle has a great pair of shoes, or the mom next door to you has a new minivan, it can be easy to assume you can afford those purchases too.
The Keeping Up with the Joneses mentality can be dangerous and you should only make a point of sharing financial goals with other like-minded friends. When you share your goals with people who have similar ones, you can help each other achieve them. Reaching goals can be easier when you have friends to cheer you on.
Thinking You Are Supposed to Have Debt
If you are already carrying a credit card balance or have massive student loan debt, creating more of it can seem like no big deal. Debt may even seem like a valuable investment. However, there is really no such thing as good debt and the more debt you have, the harder it is to pay off and the longer you will be paying it off.
Mistakes You Are Making When You Can’t Stick to Your Budget
When you are figuring out how to stick to a budget, you need to avoid making some of these common mistakes.
You Haven’t Made a Budget at All
You can't expect to learn how to make a budget if you haven’t even started. Whatever budgeting style you are going to use, it’s important that you take the time to do this for your financial goals.
You Are Budgeting for a Normal Month
When you first start a budget, you may think that you can do it once and then follow it every month. However, there may never be a normal month. Things can always pop up outside of regular monthly expenses and mess up your budget. Instead of making a theoretical budget for the perfect month, make a new budget every month for the month ahead.
This can also cut down on any unexpected expenses since you only have to plan out one month ahead. There is no way that you will be able to predict all the unusual changes for your expenses and income that will happen this year but you can predict what can happen in the next month.
You Don’t Budget Every Dollar
There are different types of budgets to consider but the zero-sum budget may be the most powerful. Your expected income should equal your budget expenses so you know every month where your money is going. This can also help you make sure you don’t spend more than you make and if you have some funds left over, it goes into retirement, savings, or paying off debt.
You Forget to Include Common Expenses
You shouldn't be caught off guard by expenses that you might not need every month but need occasionally. This can include things like new tires, holiday gifts, and school supplies. You can put money into a sinking fund every month, all year long, so you have money for these non-monthly expenses when you actually need them.
You Buy Everything You Need
If it is not in your budget then it’s not in your budget. If there is no money there then it doesn’t matter if you need it. Instead, you will need to get creative. Most of the time, the item isn’t really a need and just something you want.
You Don’t Know Where You Are Going
Being on a budget and pinching pennies just for the sake of being frugal isn’t something you need to do. If you don’t have a plan for the money you save, what is the point of saving money? Instead, start working toward a financial goal, such as getting out of debt or putting away money for retirement. It should have a clear goal attached to a specific dollar amount so you know when you have achieved it. For example, it’s very motivating to see a loan repayment amount go down.
Types Of Budgets To Consider
Selecting a budget that suits your lifestyle and financial goals is going to make it easier to learn how to stick to your budget. Another reason to pick a budgeting style based on your goals is to help avoid being too aggressive and you burning out.
The 50/20/30 Rule
This is a budget idea that is easy to remember and hard to mess up. With this system, you allocate your take-home pay with 50% for fixed expenses, 20% for financial goals, and 30% for variable expenses. This budgeting style can make it easier to see where you could be overspending so you can correct it if needed. For example, if you are spending about 40% of your income on variable expenses, such as food, this can be a sign that you need to cut back on eating out.
The Value Based Budget
People will want to do what makes them happy so this type of budget is customized to that. This means your budget will be customized to your individual priorities so that you will stick to it. After you account for your important bills, such as rent, minimum debt payments, utilities, and food, along with money for your goals, then start to think about what brings you joy.
This can be your daily coffee, weekly trips to the movies, or charitable giving. Prioritize your variable expenses so you can pay for those costs and then don’t spend money on items that don’t matter to you.
The Flexible Budget
This budget style doesn’t require a lot of work, as long as you can stay consistent with your spending. The first thing you need to do is automate your monthly fixed expenses along with your financial goals. Then what’s left in your bank account until payday is yours to spend. Since this budgeting style is a very hands-off approach it’s best for people who rarely overspend.
The Zero-Sum Budget
At first, this budget can seem confusing but once you get the hang of it it’s very practical. The idea with this budget is to account for your income before you spend it. For example, if your take-home pay is $3,000 then you are basically spending that money as soon as you get paid.
You pay off your goals and your fixed expenses. Then you assign the remaining income to your variable expenses until you reach zero. This way, you know where your money is going for the month and it can help you decide if you can afford any splurge purchases. The trick with this budget is to actually follow it once you have it written down. When you stick to it then it takes the uncertainty out of the day-to-day financial decisions.
The Envelope System
This is an old-school budgeting trick. In order to do this system, you will need to visit the ATM or bank after each payday and withdraw cash for groceries, eating out, and personal care items. You only withdraw what you need to pay for those things. This won’t work for every expense since it can be hard to pay your rent with cash, but it’s a good option for those who overspend. Once the money in the envelopes is spent then it’s gone.
Reverse Budgeting
With the reverse budgeting system, you are actually paying yourself first. This can actually be a good habit to build. Take a percentage of your monthly income and set it aside. This goes toward your emergency fund, long-term savings goals, and your retirement. Then you pay your fixed expenses, such as food and rent. Then what’s left is your discretionary spending money for the things that aren’t necessities, such as restaurants.
To Sum up
Learning how to stick to your budget is an important part of having a budget. There are plenty of reasons why you need to create a budget and having one can help you reach your goals. Overspending is one of the easiest ways to blow your budget and there are different reasons why it’s easy to overspend.
However, there are things that you can do about it. In order to make it easier to learn how to stick to your budget, learn the different budgeting styles. This can help you find the one that suits your personality and what you are trying to accomplish with your money.
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