When you’re creating a budget for your finances, you’re taking control of spending and maximizing your income. This is a great way to curb bad spending habits, boost that empty savings account, and take back your financial independence. If you’ve never made a budget before, now’s the time! And, as luck should have it, below are 7 tips for making a budget and sticking to it! Now is your time to shine!
7 Tips For Making A Budget And Sticking To It
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1) Calculate Your Expenses
Down to the smallest one! When following tips for making a budget, this is an important one. Calculate and add up everything that you spend money on.
- If you buy coffee every morning, calculate the monthly cost.
- If you put gas in your car, that’s included as well. A good budget is all-inclusive.
- Anything that causes money to leave your wallet is up for consideration.
Once you’ve determined all of your expenses, add them up and create a grand monthly total. This is the entirety of all of your spending. This number will give you an idea of how much money leaves the coffers every month. You may find it’s a surprising amount.
If you organize certain expenses into subcategories, you can get an idea of what you spend the most money on.
- That three dollar coffee you buy every morning? That’s ninety dollars every thirty days you spend on coffee.
- The lunch you buy at work twice a week for five dollars? That’s forty dollars per month.
Little expenses can add up quickly and they’re often ignored. Be sure to include every little expense to make sure you’re getting the most accurate number possible.
2) Compare Your Income
Another one of the tips for making a budget is comparing your income. Now that you’ve added up your expenses, it’s time to figure out how much income you’re bringing in and make a comparison. Add up your salary, and any other income sources such as side jobs and social security benefits.
Now it’s time to make a cost-income analysis.
Is your expenditure higher than your income? That should be your first red flag.
- Maybe you have too many credit cards and it’s adding up.
- Or maybe you’ve got a bad habit of splurging before your bills are paid.
Recognizing good and bad spending habits alike is an important step to creating a budget and maintaining it.
Making cuts is a necessity in any budget. You’ll need to trim some of your expenses to maximize your income and reallocate some funds to your savings account. This doesn’t always have to mean completely ridding yourself of favorite luxuries, however.
Take for instance your morning coffee. Maybe you really like your coffee in the morning with special flavoring, but that three dollars every day of the month is really starting to add up. You can buy coffee flavoring at any grocery store, as well as premium coffee from your favorite shops. So it’s like you’re getting the same thing, but buying the coffee in bulk is infinitely cheaper.
This is important when thinking of tips for making a budget. Think of clever ways to lessen or remove expenses. You can even tweak the necessities, like your grocery bill. A good tip is to always go into the store with a list, and stick with it. Also, never go to the grocery hungry, as impulsive buying can become a problem with an empty stomach!
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4) Use Budgeting Apps
There are hundreds of options on both the Google Play and iTunes stores for budgeting apps. While many of these apps offer similar options, there are a few that stand out in the crowd for being flexible, reliable financial planners.
- Mint is one such app that offers a multitude of options in a small platform. With this app, you can track bills in the palm of your hand, get a free credit score, and create a budget from the comfort and mobility of your phone or tablet.
- Another such app is Every Dollar, which is a highly rated financial app that lets you track spending, income, and manage your expenses. The app is highly recommended and boasts excellent reviews.
For a full comparison of the two apps, check out our EveryDollar vs Mint article.
5) Know The Difference Between Needs And Wants
Sometimes it can be difficult to differentiate a “need” from a “want”. We can find all kinds of ways to justify spending, often labeling those wants as needs and vice versa.
- Do you really need a new pair of shoes, or is that more of a want?
- How about the new flatscreen? Want or need?
Before you make any big purchases, think on them. A good rule to follow is the “three-day” rule. If you want to buy something, wait three days and think about it. After some time passes and the excitement of an impulse buy passes, you might find that you don’t actually want the item anymore.
6) Pay Off Debt
Another one of the tips for making a budget is to pay off debt. If debt is taking up any amount of monthly expenditure, you need to get rid of it. Debt is like a ball and chain around your ankles. It’ll keep dragging you down until you’ve gotten rid of it.
Factor in a debt payment plan into the new budget.
Move some things around if you must, but be sure that you’re allocating enough of your income to actually make a dent in the debt, instead of just paying the interest. Debt consolidation could help lump all of your debts into one monthly payment, making the budgeting process simpler for you. You’ll be able to focus only on that single payment that goes towards all of your debts, instead of trying to track them all.
But, if you can do it yourself with your own debt snowball (see the link below), that’s always the best option!
7) Always Have A Cushion In Place
You can be an expert in budgeting and still have a month where you’ll need a buffer or cushion. Sometimes, expenses come up that you won’t anticipate. It’s important to plan for these unexpected circumstances when you create your budget. Leave a portion of your income in savings for an emergency fund. That way, should anything come up, your bills will all be paid normally, and the savings will cover the cost of the unexpected expenses.
Tips for making a budget can be useful at any stage in life. Budgeting is a simple way to save and manage your money, and when done right, it can help create the financial freedom we all strive for.
- Always know your limits,
- track your spending, and
- keep your debts at a minimum.
These valuable tips can help create, and more importantly, stick to a budget.
Do you like these tips for making a budget? Which is your favorite? Tell us below!!
AUTHOR LaTia Longuemire
My name is LaTia Longuemire. I enjoy writing, singing, and cooking in my spare time. My passion is helping others. At this stage in my lifetime, I'm primarily focused on my children. They are everything that keeps my world spinning.