9 Great Tips on Budgeting

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9 Great Tips on Budgeting

Just because money doesn’t buy happiness does not mean you should ignore it altogether.   Poor financial habits can stress you out or strain your relationship, but it doesn’t have to be that way.  Follow these 9 tips on budgeting to get a handle on your financial future.

 I feel that when it comes to your finances, budgeting is the obvious place to start.  This is where your money goes, which I think is much more important then how much you bring in.  If you don’t know where it’s all going how can you identify problem areas and address them?

 I started budgeting many years ago and it really has changed my life in some ways.  It has pointed out areas in my life that needed a change for sure.  At one point I found out that I was spending $200 per month on coffee. 

 That’s crazy!

 I can’t afford to spend $200 per month on coffee.  But not only that, I should not be drinking that much coffee in a month anyway.  So I was able to find a way to slowly ween myself off of coffee and improve my financial situation at the same time. 

When you start budgeting, you will start to clearly see areas you need to fix.  You will be able to identify areas that are sticking out like a sore thumb and areas that will be agonizing to cut back on.  But you have to remember the bigger picture in all of this.  You won’t be agonizing over that coffee you are missing out on when you are on the beach in Barbados next summer.  

Saving all that money allowed you to go on an AMAZING vacation!  See it’s all worth it.  I truly hope it works out that well for you though.  So take these 9 tips to heart, use one or use all of them, and enjoy the ride to financial freedom.

 Tips on Budgeting:

 1.)    Start slowly – You don’t need to follow your spouse around with a little notebook and pencil and write down every penny they spend.  Start with just being aware of where your money goes.  Make  a list of the major spending categories and keep track of those.  Just having this awareness will help tremendously.

2.)    Use cash where possible – I will be writing more in the future on the envelope system, but for now, try to use cash whenever possible.  It’s easy to spend when you are just zipping that plastic magic wand through the machine.  Try taking out the cash you will need for the week and only spending that amount.  It’s much harder to let that cold hard cash leave your hands.

3.)    Use a spreadsheet – There are a ton of free budget templates out there for you to download.  Find one and fill it out.  You may not stick to it exactly at first but eventually you will be determined to come in under your allotted amounts each month.

4.)    Needs vs. Wants – Before any purchase ask yourself if this item is a need or a want.  When you go to the gas station, you will say that filling the tank is a need.  I can agree with that.  But the chili dog from inside, I can say with confidence you definitely don’t need that…your body and your pocket book will thank you.

5.)    Break budget into smaller units – Most people budget for the month.  There is nothing wrong with that.  But for me it always seems to be easier to comprehend if I break it down in to weekly and daily buckets.  If say I can only spend $400 this month on eating out, that means I have $100 per week and around $14.00 per day.  Knowing that keeps me aware of what I can spend each day and if I’m going to go over that number I can stop myself.

6.)    Go green! – Start moving towards a much simpler life style.  Instead of buying 3 bottles of water each day, consider buying a water bottle and filling it up each day at the water fountain.   Or consider saving on gas by walking places or riding a bike.  It may not seem like it but these types of thing add up very quickly, and you will be saving the planet!  These savings allow you to spend a little more in categories that are a little more important to you.

7.)    Check your progress – Make sure you look at your spending on a month vs. month basis so you can see if you are improving.  If you’re spending is accelerating in critical areas you may need to evaluate some root causes.  I like to look at trends. 6 months ago I was spending this much, and I’ve gotten down to this much.  Go me!

8.)    Set Goals – After you have created your budget spreadsheet and you are monitoring your spending, set some goals.  Pick an area or category and set a goal to reduce spending in this category by 25%.  Then list small steps to achieving that goal.  Post them where you can see them, (your checkbook, or your car etc.) and then when you achieve one of your goals go to number 9.

9.)    Reward yourself! – No good deed should go unrewarded.  When you set a goal or reach a milestone in your financial journey, treat yourself.  Spend a little extra for some ice cream or a movie.  Or if you hit some of these tips really hard, make that trip to Barbados I mentioned earlier your reward!

 These are only a few ways you can improve your financial situation with some planning and awareness.  I plan on writing about many more in the future.  I would love to hear some tips that you have learned over there years.  Please leave me a note in the comment section below!

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