Budgeting is the basic level of your personal finance management. If made properly, it will help you stay organized and reach your bold financial goals. Suppose that you decide to start budgeting. You abandoned the idea of keeping the sums in your head and created a clear plan that has to work. It’s half the success, and we’re proud of you! Now, you need to move from theory to action. And that’s when the question: “How to stick to a budget you set?” comes in.
Well, it’s not always easy. Sometimes it may come with changing your spending habits and creating new ones. The good news is that you can make it if you have a realistic plan and know a few proven tricks. Let’s talk about how to set a budget and stick to it in your day-to-day life.
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Why Sticking to a Budget Is Important?
Budgeting is a cornerstone of financial literacy and a foundation for your future financial success. Sticking to a budget will help you set and prioritize your financial goals, create an emergency fund, save money for retirement, and improve your overall quality of life. More than that, by cleaning up your finances, you will invest in your mental and financial health.
Is It Possible to Stick to a Budget on a Low Income?
Budgeting is a must-do for low-income families and individuals. This will help them manage their finances properly to cover all mandatory expenses without going into debt. When you need extra money and have bad credit, getting a $500 loan may seem a great idea until you realize you must pay it back with interest. Although sometimes it may be the only solution, it’s better to think upfront and start taking small steps toward a better financial future.
Once you start budgeting, you will have more control of your financial situation. Thus, it will give you peace of mind along with the feeling that you can change things for the better.
Best Ways to Stick to a Budget: Proven Saving and Spending Habits to Have in Life
Here are a few budgeting tips that will help you keep control of your finances.
Be Realistic
It may seem obvious, but many people don’t even realize how much they really spend daily and monthly. It may seem that money is slipping through your fingers like water while you keep living within or below your means. However, you need to face the truth and realize whether it’s the case.
Start with entering all your transactions, including your regular day-to-day spending, in the phone or notebook. This will give you an idea of how you manage your finances. Morning coffee in Starbucks? Some cute 5-dollar stuff on Amazon? Put all your expenses on the list for at least one month to have a better understanding of your spending habits.
Keep Track of Your Spending
After you have determined what you spend money on, it’s time to assess the results. Take a look at the notes that you made during the month. Then, categorize your expenses and think about whether they match your financial goals. This will help you find those spendings that you can easily cut without tangible impact on your regular lifestyle. Additionally, you can use budgeting apps to stay on top of your expenses.
Plan Your Meals and Grocery Budget
Creating a meal plan will help you eat healthier, avoid overbuying, and reduce waste. This will positively affect your finances. After you create a plan, make a list of groceries you need to cook the meals. Do your grocery shopping in accordance with the list, and never shop when you’re hungry.
Another way to avoid overspending is to buy groceries online. When you visit a physical store, it may be harder to stay organized. Buying online will prevent you from impulse grocery shopping. It’s much easier to stick to your grocery list when you shop online, with no delicious smells and marketing tricks following you around.
Avoid Impulsive Buying
Spending money on unplanned items is not always a bad thing. However, you need to sleep on the idea of making big purchases and ask yourself a few questions. Does this purchase match your financial goals? How will it affect your budget in the long run? What benefits will it bring to you? If the purchase will only add stress to your budget without bringing value to your life, it’s not the right time to make it.
Live Within Your Means
In other words, don’t go into debt to buy stuff that you can do without. Try to shift for yourself, and don’t look for easy ways to get extra cash. Although they may look very tempting, you can end up in a cycle of debt, which is extremely hard to break.
Try a Zero Spend Challenge
The idea of this challenge is pretty simple: you are not allowed to spend money on unnecessary items within a set period. You can start with one week and then do it for a month or even a year. The main thing here is to clearly determine what is considered necessary or unnecessary spending. By the way, this challenge will be even more effective and fun if you compete with family or friends. You can even make a small cash bet to stay more motivated.
Aim for Using Your Credit Card Less
Let’s be honest, you can easily do without a credit card. Although having one can be helpful sometimes, in most cases, people use them lightly and miss the moment when they get close to the limits. Keep in mind that credit cards are still a form of debt that is easy to accumulate but hard to get rid of. Try to use your credit card only as a last resort. If you find it hard to resist the temptation, ask your credit card issuer to set a lower credit limit.
Choose a Budgeting Strategy That Works for You
No one but you can determine the most convenient way to budget money. Below are the most popular methods to choose from:
50/30/20 System
This method provides for dividing your whole income into three parts. Half of your earnings go toward your essentials and mandatory payments, such as rent, utilities, and debt payment obligations. Then, 30% of your income can be spent on wants and entertainment, while the remaining 20% is deposited into a savings account. When your income is low, this system may not work, as you can spend most of your earnings on necessities.
Envelope Method
The envelope method doesn’t set any percentages or flat sums that you need to put toward each expense category. You can categorize all your expenses and then decide how much money you need for each one. If an envelope is empty, there’s no money left for this expense till your next pay date. All you can do is wait for your next paycheck to arrive or shift money from another envelope.
Budget to Zero
Budgeting to zero doesn’t necessarily mean that you spend all the money you earn. It’s about making debit and credit meet by giving each dollar you earn a purpose. Simply put, you should plan your monthly budget in a way to get zero after you deduct your expenses from your income. However, expenses are not only about buying groceries, paying bills, and making debt payments. Saving money is also a part of your budget, as well as entertainment and other financial goals. The main rule of a zero-based budget remains the same: your monthly income minus your monthly expenses equals 0.
Revise Your Budget Over a Set Period
Your financial situation may change over some time, making it necessary to reevaluate your budget and make adjustments. You may find out that the budgeting method you have chosen doesn’t fit you anymore. Also, you may need a revision due to major life changes, such as marriage, the birth of a child, homeownership, and more. Don’t be afraid to change your budgeting approach but always keep in mind that your financial goals are a priority.
Set a Certain Goal
It’s easier to prioritize your plan and stick to your budget when you know why you do it. Make it clear, put it in writing, and keep it in mind every time you feel like nothing bad will happen if you deviate from the plan. This will help you stay motivated and focused.
Final Thoughts
Budgeting is a foundation for your future financial success, and we recommend you start before your expenses hit your bank account. Although the first budget plan you make may not go as planned, you need to choose the right strategy and stick to it to reach your goals. We hope that our tips will help you anchor budget planning to an existing habit and make the most of your personal finances.
