Budgeting Tips

Tips To A Successful Budget

When it comes to budgeting, it takes an effort to continue on the correct path.  Many fail because they are not all in.  Once a goal is accomplished, they think “okay cool, no more need for that.”  What about the next goal?  Here are some tips to keep you on your budgeting path.

Write It Down:  It is important to have your budget written down.  Whether you use a spreadsheet or pen and paper.  There is also software available either for your computer or Apps for your phone.

Budgeting 100%:  For the Budget to be successful, ensure all funds are accounted for.  Before spending money, it needs to be allocated for on your budget.  If additional money is received, make sure it is included in the budget.

Partnership:  If you are married or in a serious relationship, make sure you are budgeting together.  Share with each other your goals and wants to make it a joint budget.  Budgeting is complicated, and if both parties are not in the same page it is a recipe for disaster.  If you are not in a relationship, find a budget buddy to help hold each other accountable and also celebrate each other’s successes.

Evolving Budget:  It is important to keep in mind that your budget will not be the same month to month.  One month there may be something you want to do, like go on a vacation or make a special purchase.  Plus, holidays and special occasions should be accounted for in the budget.  The idea is to prevent items or needs from surprising you.

Debt:  It is important to not just include minimum payments of debt, but creating a plan to pay debt off as quickly as you can.  It is a good idea to focus on the items with highest interest first, as interest rates increase your debt over time.  Also look at the debt that has the highest monthly payment associated with it.

Tighten and Loosen the Belt:  Some months you may have a goal that you are striving to complete.  If it is a debt item that you are wanting to check off your list, or something special you want for yourself.  It is important though to not do that every single month.  This can lead to burn out.  Don’t forget to reward yourself on occasion, especially when a goal or milestone has been reached!

Emergency Fund:  Set aside a little money every month for those unexpected items that may come up that we have no way of planning for.  Life can be unpredictable, knowing that there is a little money set to the side can help relieve some stress during those times.

Credit:  A goal of the budget is to not have to rely on credit cards, but utilizing cash.  Take those credit cards out of your wallet and either stash them somewhere or cut them up all together.

Goals:  One of the most important things when it comes to budgeting, GOALS.  Goals will provide you with direction.  Goals should have a timetable for completion, and should be both short-term and long-term goals.  With each goal that is achieved, celebrate and then create a new goal.  Remember goals just don’t have to be paying off a debt, but a vacation or new clothes…anything you may want or need.

Patience:  It is very important to have patience when just starting out.  Budgeting needs to be personal for you.  What works for one person, may not work for you.  When starting out, there may be mistakes, and that is okay.  Keep with it and always personalize your budget to you.  Learn from your mistakes and adapt.  It needs to be a reflection of your wants and needs!

Emergency Fund

Is It Really Needed…Can It Wait?

I was looking at post in a Budgeting group, and someone asked the question.  Is it important to have an emergency fund, or can it wait?  Emergencies don’t wait on us, it won’t come along and say “Oh, they don’t have money for this at the moment so I will just come back later.”  That would be really nice if it worked that way, but it doesn’t.  We never know what is going to come up.  Yeah, we have a general idea, but life likes to sneak up on us.  Let me ask you this, if you got laid off tomorrow, would you have the funds to pay expenses?  If the answer is no, then you need to have an emergency fund.  No matter how awesome a job is, or how secure you feel, anything can happen.

Long Term Goals vs. Short Term Goals

What Is The Difference

When starting down the path of budgeting, short-term goals and long-term goals were made.  What makes a goal long-term, what is defined as short-term?  Long term goals will be something that takes a major chunk of time to complete.  For example, saving for a child’s college tuition, having the ability to travel and do what you want for retirement, these are long-term goals that will take years.  Short term goals will take weeks, or months to accomplish.  That couch you have your eye on, a new wardrobe for work, or maybe that shoe addiction.  Short term goals may come up periodically, where long-term goals may not come up again unless there is a life change.

Goals will provide direction and a purpose to the madness of budgeting.  Without them, what are you doing with your money, and for that matter with your life.  It is important to ensure items are not being placed into short-term goals, when they are long-term goals.  Your sanity may depend on it.  Remember the purpose of budgeting is not to be broke and do nothing, but to spend appropriately and enjoy life.

If you are just getting started with Budgeting, check out our book.  If you need a starter worksheet we have basic ones available, and also a student version.

Tracking Your Money

What do you use?

Starting a budget requires a way to be able to track your money.  Some may be able to just utilize a budget worksheet that is checked weekly, bi-weekly, or monthly.  If you are in need of something more than just a worksheet, there are several software options available.  Software for your computers or an app.  As always, do your research and select the option best for you.  There are options available for free, but others come at a cost.  Mint offers a free app that is completely customized to you.  This app will sync with your bank, they work with most US Banks, credit cards, and investments.  This will allow you to see real-time balance information in one location.  They will also provide suggestions and calculations based on your information.  Remember, to have a successful budget, be honest about what you need to make it work.  Research different options, weigh the pros and cons, find what will work for you.

Cut Your Entertainment Budget

While Keeping The Fun

There are ways to cut down on your entertainment budget while keeping the fun in your life.  Instead of going to the bar or restaurant with friends, invite them over.  During nice weather, have a cookout.  Setup game nights, whether it is with board games or cards.  If you’re a gamer, have them over for video games.  Everyone brings their own drink, and if food is involved an appetizer or side dish.  If your into sports, instead of paying the high price for a major league game support your local sports.  Most places of some type of minor league team, if not then go out and support your local schools.  If your paying a high price for that sports package on cable, watch the games at a local sports bar or eatery and cut out that high cost.  Check out your towns/city/state website for activities and festivals that are coming up.  Most of the time they will either be free or have a low entry cost.  Of course, there are always coupons available for most places.  Get creative, think outside the box, and have fun while saving!

How to Save on Debt

Cutting Your Debt

We all know how easy it is to get into debt.  We have all done it, some of us more than once.  Debt isn’t something we can hide from, once there it follows us everywhere.  So we pay it.  There are some ways that we can reduce that debt.  If you have a bank loan, for a car, home, or whatever, check with the bank to see if you can refinance for a lower interest rate.  If you have multiple different student loans, check out some consolidation options to see if by combining them you get a lower rate.  Outstanding debt on a closed account sent to collections, talk to the company and see about negotiating the amount owed.  Be honest about what you can afford and follow through.

When it comes to credit card debt, checking with the issuer to see about lower interest rate options.  If that doesn’t work, credit card issuers will run promotions on transferring a balance to another card for 0% interest rate.  It is important to ensure you fully understand the terms of the promotion to see if it will benefit.  Most of the time, that 0% is for a specific amount of time.  If it is not paid, then all that interest will be back.

Get Your Learn On

Investing In Yourself

When it comes to investing in yourself, knowledge is one of the best investments you can make for yourself.  Maybe your side hustle can become your main hustle.  How are you going to get there?  Search out information and start taking the steps.  Is your job the best thing since sliced bread and your ready to move up the ladder?  Read books, read articles, watch YouTube videos, and listen to Podcasts.  Give yourself what you need to grow both personally and professionally.  Acquire knowledge that is going to help you complete your goals.  If your goal is saving money, read and listen about financial information.  If you want to have your own food truck, then get information about the food truck industry.  Find your passion and live your life to the fullest!

Invest In Yourself

Don’t Forget About You

When budgeting, it can get easy to forget about you.  It is important to invest in yourself.  You might be thinking, “not something else to put in the budget.”  Investing in yourself does not mean spending money on yourself.  There are different ways to invest in yourself, some require money and some do not.  Based on your needs, wants, and goals will help determine when to spend on yourself and when not to.

The biggest resource we have is the internet.  So much can be found online with just a few clicks of the keyboard.  To get well-rounded information, use different sources.  There are blogs everywhere, YouTube videos, on literally almost any topic you can imagine.  That smart phone you have, use it to read a book during your break.  Books can be downloaded from anywhere and read.

Besides information, investing in yourself is also remembering self-care.  Know when to take a break.  Whether it is going outside and enjoying the fresh air.  Taking a Spa Day.  A spa day does not have to be expensive.  There are things you can do at home, from taking a long bath, or giving yourself a facial.  Whatever gets you relaxed, and you enjoy, it is important to take care of you!

So You Paid Something Off

Extra Money

So, your budget is working.  A debt has been paid off, it is time to celebrate.  Now what to do with the extra money?  Time to look at the budget again.  Depending on your needs, wants, and goals will help allocate that money.  It can be applied to help pay another debt off and speed up your timeline.  Does it need to be split up between a savings and debt?  Every time something is paid off, go back to your budget and make a plan for the additional funds.  Even if it is just an extra $25.00, whatever the amount.  Each accomplishment gets rolled into the next!  When you stop tracking here and there, it will impact your goals.  Happy Budgeting!

Celebrate Success!

Rewarding Accomplishments

We previously discussed the importance of celebrating success.  What does that look like?  When creating your budget, goals are included.  If that part was skipped, go back and add them, seriously add goals so you know where your going, or at least the direction.  Both short-term and long-term goals.  Short-term goals are easier to reward, as they are short-term.  Once completed, reward yourself.  Rewards aren’t always going to be big-ticket items.  It can be as small as a coffee from your favorite coffee place, maybe your favorite book (BTW I know it is my Budgeting Book)!  Long-term goals are different due to length of time.  To keep motivated, break up those long-term goals with milestones.  For example, Student Load debt.  Let’s say you owe $50,000.  Celebrate when you pay off the first $1,000, then $5,000 and so on until that puppy is gone!