Creating a monthly budget can be hard for many people, and sticking to it and staying on track with it can be even more difficult. Budgets shouldn’t feel like a chore, though–it’s an incredibly useful tool that helps you improve your financial health and well-being. Follow these five simple tips to help you set up and, more importantly, stick with your budget.
Tip #1: If you overspend, ask yourself how and when it happens.
Overspending is common, and one way to help break the habit is to think about why it occurs. Is it emotional spending? Is it forgetfulness about when bills auto-deduct? Or is it something else entirely? Being aware of the triggers that cause you to overspend can help you make better choices and ultimately stick to your budget and financial goals.
Tip #2: Put your goals in writing.
Cutting down on spending can be difficult, but having a goal in mind–no matter how big or how small–can help. Everyone has different financial goals, and you should pick the right goals for you. The main idea is to create an achievable goal and remind yourself of it daily so you can make your financial goals a reality. (<-hyperlink to the first Financial Health article on KXAN about Financial Goals)
Tip #3: Only spend what you have.
While using a debit or credit card is convenient, many studies have shown people tend to spend more money when they pay with cards than if they used cash. When you use cash for expenses, you can see and feel your money, which may make you pause and consider if you really need something. You also can’t spend what you don’t have.
Tip #4: Always pay yourself first.
One of the biggest and most common budgeting mistakes is not treating your savings as a monthly expense. When you pay yourself first and make ‘savings’ a monthly bill that you must always pay, you will consistently build your savings over time. You can add even more to your savings as a bonus in the months when you have money left over.
Tip #5: Get an accountability partner.
Some people aren’t comfortable talking about their finances, but just like exercising, having an accountability partner is helpful for ensuring you stick to your goals. A fun way to do this is a savings challenge with friends or family members. Or you can do a 365-day savings challenge on your own, which begins by saving just $0.01 on the first day and increasing the amount by $0.01 every day until you complete one year. At the end of the year, you’d have $667.95 saved. It’s a simple challenge and a great way to get into the habit of paying yourself first.
And remember–stay focused!
Ultimately, cutting spending and increasing savings doesn’t have to be a drag. With these tips, you can avoid overspending, stick to your budget, and even have some fun while improving your financial situation.
For additional tools, resources, and guidance that will put you in control of your financial health, visit UFCU.org/PlanU.