According to recent studies, just 41% of Americans have a budget. For the other 59% or so who just “wing it” when it comes to managing their money, they could be missing out on valuable opportunities to save money on everyday expenses, decrease their debt loads, and put more money into investments for retirement.
If the idea of creating and sticking to a budget makes you grimace, either because you think budgeting is boring or you tried and didn’t like the results you got in the past, then here are a few proven strategies to help you really stick to a budget this time around.
How to Make a Budget
If you think budgeting is difficult simply because you don’t make enough money to live below or even at your means, then you might be surprised by the real reason people avoid budgeting. They go over budget for a couple months, get frustrated with themselves, then give up entirely!
The reason why this happens is that people just aren’t realistic when it comes to managing money for the most part. We may budget $400 per month for groceries for the family, but routinely spend $600+ on groceries and dining out instead!
Rather than promising yourself you’ll save money next month, create a realistic budget based on your current expenses instead of what you’d like to be spending. The more reasonable you are, the less frustrated you’ll be with the overall budgeting process.
Try a Cash-Only Budget
Psychological research has shown that we’re more likely to spend money when we use credit cards. To combat overspending tendencies and stick to your budget, you might consider creating a cash-only budget.
This typically involves the “envelope method,” in which you put a strict amount of cash in different envelopes, each labeled for different expenses, such as “rent,” “groceries,” and “entertainment”. Once the money runs out, you have no more cash to put towards that expense for the month.
The cash-only lifestyle requires a lot of self-discipline to stick to your budgeting method and avoid resorting to a credit card if you ever run out, but it’s certainly one of the more effective ways to truly stick to a budget! The envelope system is one of the best ways to create a cash-only budget.
Start Weekly Meal Planning
There are plenty of ways to trim your grocery budget. You can buy generic products and opt for bulk quantities whenever possible. But what about the way you plan out your eating schedule?
For instance, meal kit delivery services are all the rage nowadays. They help busy families make time for fresh meals without wasting food or even having to go to the grocery store.
If a meal subscription service doesn’t work for you, then you could easily stay within your grocery budget by planning out your meals a week in advance. This way, you won’t be tempted to buy items you don’t need at the store and you’ll waste less food as a result! It’s a win-win for your wallet and the environment.
Don’t Forget Irregular Expenses
Do you have annual expenses that continue to surprise you every year when the bills arrive in the mail? Or are you paying for auto insurance on a semi-annual basis and can’t figure out how to make it fit into a budget intended for monthly, ongoing expenses? The problem with budgets that fail is they don’t account for expenses that occur on an irregular basis.
To overcome this issue, dedicate an hour or two to calculating all of your annual expenses and dividing the total amount by 12. This way, you’ll be able to set aside money in a separate savings account to help you cover irregular bills like auto insurance premiums the next time they’re due.
Prepare for Big Expenses in Advance
This seems obvious, but so many Americans don’t even have $1,000 in an emergency savings fund, let alone a separate savings account for planned expenses. Instead of resorting to credit and paying off big ticket items like televisions, computers, furniture, or home remodeling projects in chunks, set aside money in a separate account for several months until you’re able to afford it.
This is incredibly challenging to accomplish in a culture that values instant gratification and promotes the “buy now, pay later” consumer mentality, but you’ll be much better off budget-wise if you wait until you can truly afford it.
Don’t Beat Yourself Up About It
Budgeting comes with quite a learning curve. You won’t get it completely right the first few times you try and you might even blow your budget in a bad month or two. This is normal and expected. Don’t get so frustrated with budgeting that you throw your hands up and go back to a “put it on the card and pay off what you can” mentality.
To avoid mentally beating yourself up when you go over budget, remind yourself of the progress you’ve made so far. You could keep track of your debt going down over time in a journal or digital graph. Give yourself a pat on the back for going under budget in one particular category that month. Or, simply promise yourself that you’ll do better this next month.
As long as you persevere throughout the early stages of sticking to a budget consistently, you’ll be in much better financial, and mental, shape over the long-run.