Budgeting is important. You might not know it if you have not tried it before, but it really helps. Every financial plan relies on it. Your financial status does not matter when it comes to budgeting. Whether you are living paycheck to paycheck or earning millions a year, you need to know where your money is going to if you want to have control over your finances.
You might have a preconceived notion that budgeting is not fun as it sucks the fun out of spending. However, it is really about understanding how much money you have, where it currently goes to and then analyzing and planning how to reallocate those assets to the best it can be (efficient-wise, cost-wise, etc.). Heck, I assure you if you have not tried budgeting before, that after you do, you will uncover hidden cash flow problems that, if resolved, will allow you to have more money.
Here are some tips to help you with that:
1. Overspending breaks your budget
Obviously, the primary purpose of creating a budget is to keep track of your finances under control. When you start to stray from your budget, it is usually because of allocating too much somewhere. Find out where you might have overspent and think if it deserves the overspending that could be reallocated somewhere else needed.
2. Use physical cash more often than cards
Using physical dollar bills can give you a visual aid of how much money you have, unlike with a card, that does remove the need for carrying bills, but does not give you a sign when to stop spending. Swiping cards have become incredibly comfortable over the years. It might help with convenience. However, you will lose track. Those expensive bills have the visual feature that credit and debit cards just don’t have.
3. Know what you are saving for
The hardest part of budgeting is that if you don’t have a specific goal in mind, you’re saving for, it will become tough to stick to your budget. Think about what you want to accomplish with saving and budgeting. For example, it might be that newly released phone, or a well-deserved vacation in the Bahamas, etc. Knowing what you are saving for will make or break you to stick to your budget.
4. Timeline and track
By setting a timeline for achieving each goal and tracking your progress, you will stay motivated to continue your savings!
If you want to find more tips on saving, read more about it on our website!