When you find yourself in trouble with your debt it can seem overwhelming. One of the most popularly touted debt solutions is to create and stick to a budget. However, many people have real trouble trying to do this. Here are some tips to try and make your next budgeting attempt more successful:
1. Have a specific, concrete long term goal in mind.
Often a budget is going to involve sacrifices that seem to decrease your quality of life in the short term. If you don’t have a long term goal to act as a touch stone this can be hard to deal with. Having something specific and tangible that you really want can make the small sacrifices much more palatable.
Remember a budget is a tool to help you spend less than you earn and get yourself out of debt or save up for a house. It is a means to an end not an end itself.
2. Know how much you actually make.
If you don’t create your budget with your actual take home pay, then you are hooped before you even start. Make sure you don’t guestimate, because even a $100 off a month can make a huge difference to your bottom line.
3. Plan based on real numbers and be realistic
When you make your budget it helps to have an idea of where your money is actually going, and how much you spend each month on which things. Pull your bills and receipts from the previous month and only cut where it seems realistic. A budget is like a diet, if you plan too strictly you set yourself up to fail. If you want to reduce a category by a large amount do it by increments over a period of months. Don’t forget to factor in irregular bills that happen less than once a month.
4. Set up budget friendly banking
Make sure you have both chequeing and savings accounts. Look into whether your bank offers automatic transfers to your savings account. Are sub accounts available? Can you pay bills online? The answer to all of these should be yes. You also want a bank that isn’t charging you monthly maintenance and ATM fees.
5. Use a budgeting tool that works for you
Find a tool that works for you. If you try and use something overly complex because that is what the financial gurus use you are going to get overwhelmed and it will impact your success. You need a tool to help you keep track of spending and goals, but that tool can be a simple as a pencil and paper if that is what works.
There are also plenty of free websites and mobile apps that are available online. Shop around and see which one you find to be the most intuitive.
6. Find some support
Any change is difficult to accomplish alone, so find someone who is willing to support you. Spend less time with people who are committed over spenders and will tempt you off into slipping. Plan activities with friends where there are fewer opportunities for you to blow your budget.
7. Set some very short-term goals
Your long-term goal won’t always be enough to fend off the day-to-day temptations or the thought that “one slip won’t hurt”. Set shorter more achievable goals to keep you on track. If I stay within my entertainment budget this month I can go to a guilt free movie. If I come in under on my food budget I can buy Brie and Prosciutto.
8. If it isn’t working, change it
When you make a new budget it is a tentative plan. If it turns out not to be realistic, or didn’t take something into account, go back and do it again. You are looking for a long-term solution here, so trying to stick with something that doesn’t work isn’t going to get you anywhere.
