So you’ve decided to get your spending under control. Now, all you need is a plan.
Whether you’re budgeting for the first time, or tried it before and failed, here are five tips for setting a budget and sticking to it… once and for all.
Tip 1: Get support. Don’t try to tackle your new financial plan alone. Support comes in the form of your friends, family members and successful role models. These helpful structures can be established before you start. If you’re going into a budget with multiple sources of debt, the best support may be in the form of a non-profit credit counselor.
Tip 2: Choose a program. The program you use can be as simple as a free spreadsheet template, or as sophisticated as a new software installation. Some programs “communicate” with your bank accounts to automatically log your transactions, while others require you to manually enter in each one. The benefit of automation is, of course, convenience. On the other hand, if you have the time, physically tracking each expenditure (and source of income) will help you constantly stay aware of where your money is, when it’ll replenish and where it’s going.
If this is your first-ever budget, opt for a simple, free program. Once you have a few years of “making your money behave” behind you, then shop around for a software that charges money and offers extra (sometimes complicated) features like forecasting and investment reports.
Tip 3: Look at your budget every day. Checking out your current financial plan every morning may be motivating to you later when you’re deciding whether to go out for dinner. Or, reviewing it in the evening may help you keep tabs on the realistic outflow of cash in a day. Whether you choose morning or evening, stay engaged by at least taking a quick look daily. Spending trouble usually happens when you realize you haven’t consulted your plan in a few days… or weeks.
Tip 4: Stay Inspired. You might feel indomitable now, but believe it or not, staying motivated takes effort. To keep your inspiration up, try any (or all!) of these ideas:
- Post a picture of your main source of inspiration in a prominent place like your bathroom mirror or car’s dashboard. For some, it’d be a picture of the kids. For others, it’ll be a credit score.
- Fill your toolbox. Inspiring resources and ideas from financial advisers are a must for staying motivated.
- Tell others. When you spread the word about your commitment to frugality, they can help keep you on track. Sure, it may not be fun when a friend questions your bright new shoes, but if you’ve invited the feedback in advance, the experience turns into a healthy example of iron sharpening iron.
Tip 5: Save before you spend. This tip hits two birds with one stone. First, it makes sure you’re saving. Second, it covers you in case your budget loses your attention.
Here’s how it works: You set up an automatic transfer each time your paycheck arrives so that a portion of each regular deposit goes into a savings account. This way, you’re not caught completely off guard when an unexpected crisis arises. Having this habit of saving will also offer you grace if ever your spending plan is ignored for a few weeks and you find you’ve blown a category or two. Just dip into that savings and resolve not to let it happen again.
What are your tips for setting a budget and sticking to it long-term? Leave a comment below or tweet us at @cesisolutions!
Image Source: Flickr
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