How to Make A Budget and Stick To It

Budgeting is an extremely important financial skill that all adults should have. Unfortunately, it can get very difficult and tedious, especially if you are living paycheck to paycheck. That’s why you should aim to make a habit out of it so that it becomes part of your daily routine. Here are our tips for better budgeting.

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Be honest with yourself about your income.

If you use credit cards, it can be tempting to tell yourself that you’ll get a raise to pay off that big purchase eventually, or that you can always pick up more shifts at work. While it is good to be optimistic, you also want to keep a dose of realism involved when you are making a budget. Always plan for the minimum amount of money you’ll make each month, not the maximum (particularly if you are working on an hourly or tipped basis). That way, if you have extra, you’ll be able to feel comfortable and use it for something nice instead of needing it to pay off expenses.

Divide your income up into detailed spending categories.

To make an effective budget, go through your expenses mentally and then write them all down. Obviously, this will include things like rent/mortgage, car payments and gas, food, bills like water and gas, and other essentials. However, if you know that you like to go out to eat once a week or that you enjoy a good shopping trip every so often, you should add those expenses in there as well instead of just assuming that you’ll be able to completely cut them out. If you absolutely cannot afford all of your current expenses, make a plan for exactly how you’re going to cut back instead of saying, for example, that you’re going to cut back on spending cold turkey.

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Keep a record of what you spend.

If you know you have to write it down, you are likely going to be much more conscious of the money that you are spending than if you just swipe your credit card and forget. There are many apps for your phone these days that will help you keep track of your expenses and make sure that you are staying on budget. If you aren’t that tech savvy, keep a budget notebook and start writing down your expenses at the end of each day. You’ll likely notice some patterns that you may not have picked up on before, which can help you improve your day-to-day habits.

Look for cheaper alternatives to the things you love if you need to cut back.

One of the biggest problems with developing a budget is that it can be really difficult to changing your habits if you are used to living a certain kind of lifestyle. For example, many people know that cutting out Starbucks is a great way to save money, but they don’t want to go without coffee. Instead of feeling sad because you can’t drink Starbucks anymore, learn how to make your own coffee at home. If you normally like to go out to the movies with friends on the weekend, make an effort to put together your own movie night with cheaper rental DVDs. Just because you can’t spend money doesn’t necessarily mean that you need to stop doing the things you love.