How to Stick to Your Budget: 4 Ways to Make It Work
The hardest part of budgeting isn?t creating a budget, but sticking to it. Once you?ve set your budget, there are a few tips to follow to help you make the financial decisions that are right for you.
? Keep track of all documents. One way to make sure you?re not creating your budget at the beginning of the month and not looking at it again until month’s end is to write everything down in order to keep track of every dollar you spend. You should also keep track of all receipts, bills and payment confirmation numbers. Whether you keep an online log or document every expense with pen and paper, keeping track of everything is an important step to make you aware of exactly where your money is going. Your bank may even offer online banking resources to help you track all your expenses.
? Keep an organized system. There are many different methods to keep your budget on track throughout the month. Here are a few:
o Online program ? Whether it’s keeping track of your expenses with your bank’s online banking service, or you?re using a computer program such as Quicken, there are numerous ways to manage your budget and bills online. From convenient 24/7 access when you need it most to setting up your monthly bill payments, there are an assortment of tools at your disposal to make your online banking experience fit your needs.
o Envelope/cash system ? An envelope or cash budgeting system is as simple as it sounds. This basic cash budgeting method is great for those who overspend without even realizing it. The basic idea is to withdraw cash from your account at the beginning of the month and divide it appropriately between folders for various different expenses. Then, throughout the month, when the cash is gone in one folder, that’s when you stop spending in that area of your budget. For example, if you have an entertainment budget, set aside a certain amount of cash for that in an envelope, and when it’s been spent look for ways to entertain yourself without spending any more money.
o Accordion folder ? The idea behind using an accordion folder is to save all receipts, bills and paperwork based on the different spending categories you have in your budget. For example, keep all grocery store and restaurant receipts together in one food folder to see how much you?re spending on food every month. This method takes the place of the shoebox of receipts you may keep stashed in a closet to help you keep much more organized. And when you have all of your documents organized, it will be even easier to reconcile your monthly statements to ensure you?re staying on track.
? Keep past records. In order to compare progress month to month and continue to tweak your budget to make it more reachable, consider your past progress while continuing to plan for the future by identifying future opportunities. So, don?t throw away past paper records, old pay stubs or even bills that have already been paid. Many financial experts used to suggest that you keep financial records for up to seven years. However, with online resources, statements and records easily at your fingertips, you can chose to toss immediately or only keep paper records for up to a year. This not only gives you protection if your documents were ever lost or stolen, since online statements are more secure since they are password protected. Additionally, it gives you insight into your spending habits month over month, and even year over year. You may also be able to archive old account statements to quickly and easily track your progress, without keeping extra paperwork on hand.
? Keep it realistic. While referring to past records is important, if you?re not using them to continue to tweak and change your current budget you are doing yourself a disservice. The key to sticking to a budget is to ensure that your budget is realistic. At the end of every month, take inventory of your spending history over the past two or three months. By looking at these records, you will begin to see if you have to add additional funds to a specific category or if you can trim your budget in certain places. For example, if you budget for $100 a month in car gasoline, but you?re consistently spending $125, you may want to think about increasing that part of your budget. On the flip side, if you?re budgeting for $250 in groceries every month but only spending $150, you can free up that extra $100 a month for your savings account. And if you can save extra money that’s been cut out of your budget, use an insightful savings interest calculator or a goal savings calculator to calculate how much interest on your savings you can expect or how long it will take you to reach a specific savings goal.
If you?ve created a budget that you think fits your needs, try it out for a month or two and see if the tips above help you make your financial goals a reality. Sticking to your budget can be easy when you keep track, keep organized, keep records and keep it realistic. So, keep it simple and set yourself up for a budgeting success today!
