If you’re thinking of putting together a budget, congratulations! That’s a great first step to getting your finances in order. Here are a few tips that should help make your budget work for you:
Write everything down. It’s a little tricky to get in the habit of doing this, but before you put together a budget that you can realistically live by, it’s so important to understand where your money is going right now. For one week, make an effort to write down everything you spend money on. You’ll probably be surprised how much you spend in certain categories, but that’s ok — you can’t help your monthly budget until you know this information. It’s even better if you keep this up for a month because you’ll catch all of your monthly bills, too.
Set a cash spending limit. One trick that can be helpful for curbing your spending on non-essential purchases is to give yourself a limit each month and put that much cash in your wallet. Once the money is gone, it’s gone and you shouldn’t use credit cards or debit cards to keep spending. Constantly seeing a visual reminder of how much money you have left for the month will help you ask yourself, “Do I really need this?” before you make a purchase.
Don’t beat yourself up. If you go over budget in a category one month, don’t beat yourself up about it. It can take some time to turn around bad money habits. However, one thing you don’t want to do is give up on your whole monthly budget just because you’ve blown one category. If you budgeted $100 for groceries this month and have already spent it after just two weeks, think about ways you can make up for it throughout the rest of the month. Can you use your groceries creatively to stretch two weeks of groceries into three weeks of meals? Or can you spend a bit less eating out this month so that some of your money budgeted for that category makes up for the shortfall? If you think of it this way, it almost becomes like a game!