Budgeting may seem dreadful and complicated, but it doesn’t have to be. In fact, a well-made budget followed to a T makes your life simpler and easier to manage. You’ll be able to predict in advance whether you can afford something, and with discretionary funds earmarked, your budget won’t have to prevent you from doing fun things.
Whether you’re looking to save money on groceries, resolve debt, or save for retirement, budgeting will help you accomplish your goals without guilt, confusion, or unnecessary hassle. It’s a useful tool for anyone.
Here are our best budgeting tips!
1. Categorize expenses
The most essential expenses should come first: food, shelter, basic utilities, clothing (if it is absolutely necessary to buy new clothing) and transportation. Giving and saving should also be placed in this category. After establishing these categories, you can mark money for discretionary (“fun”) spending.
2. Give yourself some space for miscellaneous spending
In addition to discretionary spending, you may also wish to put aside money for miscellaneous purposes in case unexpected expenses arise throughout the month. If there are certain expenses that repeatedly fall under this category from month to month, turn them into a new, separate, permanent category in your budget.
3. Make your budget with everyone who needs to be involved in decision-making
Married? Have a joint bank account? Make sure to down with your spouse at the beginning of the month, take a look at what your income and expenses will look like, and start making a budget. You can even put on music in the background to help you focus and make it a fun “budgeting night.”
4. Adjust your budget by the month
What month is it? If it’s December, you’ll probably want to make space for holiday gifts. If it’s a loved one’s birthday this month, you might want to leave space for gift money, too. Maybe you’re planning a vacation. Whatever the occasion, make sure that these things are duly accounted for – this will help you from spending more than you reasonably can.
5. Make budget cuts
Canceling cable, skipping the coffee shop, eating in instead of eating out, and buying used or discounted items are all great ways to trim your budget and save money.
6. Make a schedule for paying bills
Look at your calendar and mark essential dates for spending. You may wish to buy your groceries on a specific day each week, or two specific dates each month. Another idea might be automatically drafting your bills from your checking account so you’ll always have them done on time.
7. Observe progress
How efficient is your budget? Is there any room for improvement? Be sure to track spending from older budgets to see what you’re doing well and what you could do better.
8. Get rid of your credit cards
This is one of the best ways to save money and meet your budgetary needs. Cut up your credit cards, throw them in the trash, whatever you’d like. Just make sure you’re never using them again. Done? Good.
By using your debit card and cash instead, you’ll avoid the annoyance of high interest rates and fees, minimum payments, and all the stress that comes with paying for things on credit. All your money will come directly from your bank account, with no interest charges required.
9. Use cash for certain budget categories
Sometimes even debit cards make things too convenient. If you’re overspending grocery money or fun money, cash out those parts of your budget and put them into clearly marked envelopes.