Posted on Wednesday 20 April 2016
Have you asked yourself why your budget isn't working for you? You probably know that a budget is absolutely critical to pay off any debt and to manage finances in general. However, you might not be meeting your goals or saving up the way you expected.
This could very well come from overspending, paying too much in taxes, or maybe just forgetting where your money is going.
In order to get your budget back on track, it’s important to find out where the problem really lies.
Below, you'll find some great tips that can help you get back on track.
Budgeting and tracking finances is one of the more difficult things in life.
However, it can be mastered and you can definitely get ahead.
Bad spending habits are often the reason why a budget isn't working, but there are other reasons too.
However, it isn't always easy to identify them right away. To really maintain a functional budget that works for you, the first step is locating the expenses you can cut back on or remove where possible.
Tip 1: Identify any expenses you can cut back on - Think about where you habitually spend unnecessary money on a daily basis. For example, if you live in the city, cutting back on driving could be a way to save a few dollars.
You may find that you can walk, take public transportation or at least park a few blocks from work to save on city parking costs. Walking can also help with your physical health, allowing you to also save on potential future medical expenses.
Tip 2: Only use cash when out and about - Leave credit cards, debit cards and your cheque book at home. If you are spending a night out, only take a fixed amount for cash purchases and this will help you stay on track with your budget. You'll find that you won’t overspend this way and you can avoid any forgotten or surprise expenses on your bank statement.
Tip 3: Visualize the end goal - In order to keep yourself on track, visualize where exactly is your saving and budgeting going to get you in the future. If you're saving for a vacation, think of how proud and relieved you’ll be that you stuck to your goals. If you are saving for your kid's college fund, imagine how it will feel when you accomplish it. This same strategy can be applied to home improvement ideas, weddings, home buying and other things you’re saving up for and plan to do in the near future.
Tip 4: Think about a purchase before actually spending - We’ve all been there . . . seeing something in the store you just have to have but deep down, you know you shouldn't blow your money on it.
Impulse spending is a hard habit to break. It always nice to reward yourself every now and then but make sure you are the one in control. Not your money.
Tip 5: Remove the parts of your budget that aren’t working - Find the specific areas where you’re falling off on your budget. Take the time to challenge yourself to focus on one area at a time instead of overwhelming yourself trying to fix your entire budget at once.
Everything happens in steps. Focus on how much progress you've made vs the results.
Whether it’s groceries, gas or other bills, hone in on the problem areas and take it one step at a time.
Tip 6: Record every transaction - Staying on top of your spending is the most difficult part of upholding a budget, especially for someone who is new to following one. One thing that can help is to carry a small notebook and pen at all times. This will allow you to better track of where your money is going.
Tip 7: Go back and identify all necessary expenses - If you haven’t yet, the first step in creating a budget is to figure out your necessary expenses. If you jumped into creating a budget by just determining how much you want to spend each month, go back to step one. Although it may work for some people.
Now look at what you should be spending money or and what not. Make an informed decision and either decide to keep it, or discard it completely. Clarity is very helpful. Especially when it comes to a budget.
Tip 8: Print your budget out - If you’ve already done this step, that is great. However, if you’re using your phone or computer program to keep track of your expenses, consider moving that information to a spreadsheet or other document that you can physically print out.
Hang it somewhere, like on your refrigerator so you can see it all the time. This way you can record your progress as well.
Tip 9: Don’t cut your emergency fund - We’ve gone over the importance of auditing your current budget to make sure all of your attention is only on the most necessary things. However, you also need to create an emergency fund. Something that has 6-12 months worth of money. Used only for emergencies.
Tip 10: Celebrate your accomplishments - Keeping a budget is hard work. Every so often, celebrate the fact that you’ve stayed on track, met your goals and are on your way to experiencing financial freedom.
Hang in there. You'll make it.