No one likes the word “budget,” and for good reason, since we all want to spend our money in the best ways we see fit. Unfortunately that isn’t always possible. We create budgets for a number of reasons, such as saving up for a big-ticket item like a new vehicle or a big trip, and to help make ends meet when something unexpected happens, like a lost job or a medical emergency.
Budgets can actually feel like a fun game, as you learn to pinch and save and begin to see the benefits of having a budget in place. It’s not as hard as it looks and by following these 4 tips you will know how to stick to a budget in no time!
Tip #1: Create a Game Plan That Will Realistically Work For You
This is going to sound difficult, but necessary – trust us.
Save your receipts for a whole month, every last one of them. At the end of the month, take all of those receipts and divide them into three groups: Necessities, Comforts and Luxuries.
- Necessities
- Electricity, rent, gasoline or bus fare, groceries, bills and toiletries – the things you can’t live without.
- Luxuries
- Buying new clothes or video games, getting your nails done or having a massage, buying at least one specialty coffee a day and other things that you do because you enjoy them, not because they’re essential to your daily life.
- Comforts
- You don’t need 100% of the time, but you do need them every now and again, like occasionally joining friends for dinner and a movie.
Once you have all of your day-to-day expenses separated, make a list of everything in your Luxuries group, since these are the things you will stop yourself from doing or buying while your budget is in place. Now that was simple, wasn’t it?
Tip #2: Find New Or Cheaper Ways To Replace Items From Your Luxuries Group
| Luxury | Solution |
|---|---|
| Spending money on concert tickets. | Check out your city’s calendar of free events and concerts, and pick a couple to attend with friends. Your local music scene might surprise you! |
| Going out to eat multiple times a week. | Set up a rotating potluck with your best friends, and invite everyone to bring a dish to share. You still get to try fun new foods without having to shell out the big bucks. |
Tip #3: Track Your Expenses Well
Creating a Microsoft Excel spreadsheet is usually the most convenient way to track your expenses. Within the spreadsheet, create sections for daily, weekly and monthly expenses and diligently fill in the spreadsheet at the end of every day or week. You have no idea how much it will help to tangibly see your progress, utilizing this method. (It also helps you see if you’ve slipped up a little bit, so you can get yourself back on track as quickly as possible.)
Tip #4: Set Specific Goals
Setting goals for your budget can go one of two ways:
- You are trying to cut down on the money you spend in general
- You are trying to save a specific amount to be able to pay for or pay off something
If you fall in the former group, your goal should be to spend less than a certain amount each week, such as spending $5 less each week. For the latter group, you know exactly what your goal is, so now you need to decide how long you’ll need to get that amount of money together. A month? 6 months? 2 years? Then divide the total sum of money by the number of weeks you’ve estimated that it will take you, and you’ve got the magic number that you need to have set aside each week to reach your goal on time.
Want more smart budgeting tips? Check out our video on how to budget for your international education.
