Follow the 3 tips below to take your budget from so-so to supreme.
If you regularly create and use a financial budget, congratulations! You’re in the elite minority as only 1 in 3 people actively follow a budget.
You know the importance of building a financial plan and staying on-track. Likely you’re experiencing the benefits of decreased financial worries and better money management as compared to your non-budgeting peers. And you probably enjoy a healthier savings account (more than $500 saved) and lower overall debt (less than $17,000 in credit card debt) too.
But has your budget hit the blahs? Is it really helping you make traction or just getting the basics of paying the bills done? Follow the 3 tips below to take your budget from so-so to supreme.
Side note…if you, um, don’t have a budget, it’s never too late to start. Then use these tips to polish it to perfection.
1. What do you want?
Take a moment to think through your financial goals. What do you want and need to achieve in your financial future? Is your budget working for you and are you able to stick to it or does it need a makeover? Do you want to erase some debt, boost your savings account, or make sure your retirement is on track?
Set one or two financial goals for yourself and make sure your budget supports them. Here’s a top 10 list to get your creative juices flowing:
1. Get out of debt
2. Plan for an early retirement
3. Have a well-stocked emergency fund
4. Create multiple income sources
5. Have enough—but not too much—insurance
6. Be able to live on less than you earn
7. End “stuff” addictions
8. Financial plan to do work that you love
9. Give generously
10. Leave your financial house in order when you pass away
Lots to think about, right? Pick at least one and tweak your budget to get moving in that direction.
2. Drill the fundamentals
Your budget is sure to include lots of categories. Does it cover all 4 below? If not, consider an adjustment or two. Small changes can equal big wins and big grins.
2. Saving—You’ve probably heard the rule of thumb to give 10%, save 10% and live on the rest. It’s tried and true. So give it a try!
3. Spending and fun money—You work hard for your money so have a little fun with it! Start setting aside a little just for you, and create your guilt free money zone.
4. Bills and necessities—Not much to say here…you know the importance of paying on-time and covering the basics.
3. Details count
Sometimes we struggle to follow our budgets because we haven’t made them detailed enough. And we haven’t included a plan to stick with the plan. Think about:
Your food and necessities category. Is everything broken down into multiple categories? If you lump everything into one large amount but can’t stick with the plan you won’t know where specifically you’re overspending. Consider a structure like this:
2. Eating out
3. Kids lunch money
4. Coffee (ordered in bulk or coffee bar visits)
5. Paper goods (toilet paper, cleaning supplies, etc.)
6. Hygiene items (shampoo, soap, etc.)
7. Over the counter medications
Versus a category that just says “food and necessities.” Assigning a dollar amount to each individual group makes a big difference. If you’re struggling to stick to a particular area, break it down.
Speaking of sticking to your budget…consider using cash for a portion of your purchases. Once it’s gone, it’s gone so paying with cash helps prevent overspending. Using cash for even one or two areas of your budget (perhaps gas and groceries) can be a visual reminder of your financial goals and help you keep them in focus.
Try these 3 budget hacks, and enjoy your budget makeover. Happy budgeting!