Budgeting Your Way to Success and Happiness
Budgeting can be an overwhelming task, especially if you’ve never attempted to budget before. Even if you’re not the most frugal person, don’t be discouraged by the thought of budgeting. It’s a powerful tool that can get you on the right track towards successfully managing your money. Everyone strives for financial freedom, and relieving financial stress with a balanced budget will get you one step closer to a successful and happy life.
10 Tips for Successful Budgeting
- Give Your Budgeting a Purpose. Before you can begin the process of budgeting, you need to have a reason, or reasons, why you are budgeting. Budgeting is not a solution, it is a tool you can use to guide you to spending less money than you earn. Budgeting is not always easy, especially when you have to give things up. By having specific long-term goals in mind, you make it easier on yourself because you know you are giving these things up for something that is ultimately more important.
- Know Your Actual Income. The money you make isn’t the same as what you are taking home. You need to calculate what you are losing in taxes so you can use that as the framework when you budget. Knowing the exact number is important in order to create a budget plan.
Keep in mind, if you don’t have a consistent monthly income, you should create a short term emergency fund. This fund will contain at least four weeks of your savings. If you don’t have consistent paychecks or government subsidies, you need to always have money saved in case your check doesn’t cover your bills. In addition, if you borrow from your savings, you should always pay it back, especially in months when you are receiving a higher salary, such as when you receive a bonus or work overtime.
- Accurate Monthly Spending Data. In order to effectively budget, you need to know what you spend monthly; “ball park” numbers will not suffice. Pull out all your bills and receipts for the past couple months, and find out how much you’re actually spending, and on what. Think about your spending for the average month, and make your budget based on those numbers.
- Start with a Simple Budgeting Tool. Start with a pen and paper, write down all the bills you have, write down how much you make, find out what you have left, it should be simple enough that you aren’t getting overwhelmed with the planning process. Don’t give up because budgeting is too complicated. Move to more complex tools if you find managing the simple budgeting tools that you start with aren’t cutting it.
- Have a Budget Buddy. Whether you are budgeting with a partner, or on your own, it is important to have a positive support system around you. If you have a partner, you shouldn’t be the only member of your household who is saving. It’s important that both parties are doing their best to follow a budgeting plan.
If you are budgeting on your own, you should surround yourself with friends and family who understand and support your change. If you friends are the type to overspend, perhaps you shouldn’t put yourself in a situation where you would feel pressure to keep up with their spending habits. Find a healthy support system to support your lifestyle.
- Use a Bank with Saving Features. You should always have a checking and savings account that have useful budgeting tools incorporated into them. Something as simple as automatic transfers from your checking account to your savings account can help you maintain your budget, without even having to think about it. You should pay your bills online, or even better, have your bills automatically come out of your account. This way, you never forget to pay a bill, and the option to spend the money on something other than bills is not there.
In addition, choose a bank that does not have extreme maintenance fees, and try to avoid racking up ATM fees. A few dollars here and there might not seem like much, but it can add up!
- Have Short Term Goals. Budgeting can become disheartening when you don’t see immediate results. One way to keep yourself motivated to save is to have short-term goals that are easily achievable when you stay on budget. Set an entertainment goal for the week, and if you stay under it, treat yourself at the end of the week. Short-term goals remind you why are you are budgeting: for the big reward at the end, whether that is a house, school, or a car! Eventually, you won’t need motivation, budgeting will become a habit.
- Pay With Cash Only. The best way to remain on budget is to have the money in front of you. Take out enough cash to last you one week at a time. When you spend all the cash you have taken out, then you have reached your budget for the week. It’s harder to spend when you can see the budget dwindling away in front of you. It’s much easier to swipe a credit card because you don’t have to watch the money leaving your hands.
Another budgeting tip is to allocate your weekly allowance into envelopes for each of your budget categories. For example: create separate envelopes for groceries, gas, and entertainment. When you go to the grocery store, spend only what you have in the grocery envelope. If you spend it all then you know you have to eat what is in the house until your next paycheck, or remove cash from a different envelope. If you find one envelope runs out faster than another, for the next month, adjust your budget.
- Be Realistic. Whatever your budgeting plan is, make sure that it is achievable. It is important to slowly ease yourself into budgeting. You can’t expect to cut back 75% on something the first week. You have to slowly reduce the amount you spend, and once you reach that short-term goal, cut back a little more each time.
- Be Flexible. Things change, and your goal may have been realistic one month, and unachievable six months later. This doesn’t mean your budget plan was wrong, or too hard; it just means you have to adjust. Take a step back and reevaluate your budgeting plan. Your life is always changing and your budgeting plan should too!
If you find yourself in a pinch and your budget isn’t cutting it, Magical Credit specializes in short-term cash loans. If you need a cash loan to get through a budget crisis, fill out a Magical Credit loan application now! We are a Toronto-based loan company that provides bad credit loans to people on government income, subsidies and pensions. You can call us at 1-877-213-2088. We are always available to help!