Need a better way to manage your finances?
The simple act of writing down how much money you have coming in and going out each month can make a big difference to your spending habits. After all, it's difficult to change when you don't know what you're doing wrong in the first place.
Of course, creating a budget that you can actually stick to is often easier said than done. While we all start with positive intentions to save more and spend less, it's all too easy to fall off the wagon with your spending. With that in mind, here are a few tips that are sure to help!
Know All the Little Details
The biggest mistake that most families make when it comes to planning their budget is that they only add up the "big" expenses and leave the little things out. While a couple of dollars on a coffee might not seem like much at first glance, when you're spending that money every day, it starts to make up a significant part of your budget.
When you're planning your spending strategy for the months ahead, start by adding up all your after-tax income, but leave out any money you're not sure you'll receive, like tax refunds and bonuses. Once you've got your incoming money written down, track all of your monthly spending, including costs for little items like newspapers, meals out, and lunches at work.
Make Sure You're Not Spending More Than You Should Be
When you start to dig down into the details of your budget, you'll notice a few areas where you're less careful with your spending than you should be. Part of improving your budget strategy is figuring out how to cut down on those spaces. The other part is looking for areas where you're overspending without realizing it.
For instance, before you start looking for personal loans, mortgages, car loans, or any other financial product, make sure you compare the prices you can get online. There can be a significant difference between the loan with an average interest rate, and a loan with the best rate. Over time, this saving can lead to a lot of extra money in your pocket.
Look for Things you Can Cut
Once you've compared your loan providers and other expenses to make sure that you're not spending more than you need to, it's time to start compromising on your spending habits. Start by asking yourself how much you'd ideally like to cut your spending by each month. Perhaps you'd like to save 50 dollars a month towards holiday gifts, or $100 towards a vacation.
Once you know how much you'd like to save, look for areas where you can begin cutting your spending. For instance, can you reduce the number of times you eat out each week? Would getting rid of your cable package in exchange for a Netflix subscription save you some much-needed cash? You don't have to stop doing everything you enjoy, but you will need to cut down.
Plan for the Unexpected
There are plenty of reasons why you may want to start budgeting. For instance, you might want to start a savings account, so you can eventually pay for that new kitchen you want. On the other hand, you might want to treat the family to a vacation or an exciting treat. If you want to make sure that you can maintain your savings, it's important to build an emergency fund into your budget for when things don't go entirely according to plan.
Building an extra fund into your budget ensures that you have other cash to turn to outside of your savings when you suddenly need to pay for a hospital bill or repair the car. That way, you're less likely to drain your savings and end up with no motivation to continue with your hard work.
Make Saving Easier
Finally, a lot of people look at budgeting as an unnecessary hassle. However, the truth is that it can make your life a lot easier when you budget properly. All you need to do is make sure that saving cash is as simple as possible for you and your family. For instance, some people find it easier to save when all of their debts are consolidated into a single loan. Others prefer to set up direct debits, so they don't have to worry about paying bills on time.
Think about how you can make saving easier for you, and implement strategies that will set you up for success.
