While many people view a budget as a straightjacket that will keep them from doing what they want, the truth is that budgeting means you’re being purposeful with your money before the new month begins. Once something has been budgeted for, you can spend that money without feeling guilty!
Many people even say they have “extra” money after they create a realistic budget and stick with it—and that is what we call winning. Check out these five easy ideas to help you master your budget!
#1 Pay off Debt
Pay off your debt. Attack it! Get mad at it! Stop letting debt rob you of the very thing that helps you win with money—your income.
Traditional budgeting tends to work best for people who are over-spenders, trying to pay down debt, or those who want to increase their savings and don’t mind getting into the nitty-gritty details of categorizing all their spending and debt repayment.
Once you pay your debt off, the freedom you will feel is priceless. If you have debt, especially high-interest debt, paying it off needs to be a top priority.
Having a budget is key to reaching financial success because laying out all of your income and expenses will show you exactly how much extra money you have to throw at your debt every month. However, budgeting is not one size fits all! You have to find a method that works for you.
Some folks find it helpful to have an accountability partner or online support group so that you’re held accountable for choices that add to your debt instead of paying it off. Accountability partners and support groups are also there to support you and celebrate every win along the way!
#2 Track your Progress
It’s also important to track your progress through the month and the year when developing your budget. This will let you know when you’re on track and when you might need to make some adjustments. If you don’t know where your money is going every month, then you have a serious money management problem.
One key category to keep a close eye on is your grocery shopping. The amount of groceries you need varies depending on your household situation, but it’s important to find what works best for you and stay on track—too many people fall prey to impulse purchases at the grocery store and in the checkout line.
Be sure you examine your earlier budgets from time to time, too, so you can see how far you’ve come. When you track your progress, you will start to see what areas are taking most of your money and affecting your budget—and where you have been saving money! Take time to celebrate even the small wins.
#3 Give Yourself Grace
At times, we are our own number one critics. Tough love can be helpful sometimes, but it can also cause stress. It’s important to remember that it can take 3-4 months to get a handle on this whole budgeting thing.
Your budget won’t be perfect the first time, or the second, and progress doesn’t happen in a single step—but you will get there! Mastering a budget means developing discipline, consistency, and patience.
One way to extend yourself a little grace is to set up automatic drafts out of your checking account to pay bills at the same time each month, so you never have to think about it. Buying your groceries on a set day also helps!
#4 Have Goals
When budgeting, ask yourself why you are deciding to make these changes. Are you trying to travel more? Building an emergency fund? Once you have figured out your “why,” then the rest will be easier!
Knowing your why helps you get a clear perspective on the importance of saving, and reminds you that dipping into those funds should be off-limits. Instead of feeling like you’re depriving yourself just to have a larger savings account, remember that your money is going toward a specific goal.
Many people find it difficult to say no to impulse purchases, eating out, or a morning coffee habit. Comparing those short-term pleasures to your long-term goals can help you prioritize your spending in a way that honors your future self!
Another good goal is to budget based on a low-earning month, and to use that figure as your budget income. Money is a tool, and a budget is an instruction manual for how to use it.
#5 Prioritize your Spending
Once the cash runs out, stop spending! Cash can be the ultimate accountability partner, whether it’s an actual envelope of bills or an upper limit on a spending category in your budget. When you have gone through your spending cash for the current time period, do not dip into any other funds!
Dipping into other funds to continue spending in another category means you are no longer saving or budgeting correctly, but instead putting yourself into debt—and debts have to be repaid one way or another.
It helps to have a small amount of money set aside for unexpected expenses during the month. This can be a miscellaneous category in your budget that will help you prioritize your other spending.
Be mindful throughout the money, and continue tracking expenses that frequently pop up—you may want to create a more specific budget category for things that show up repeatedly. That way, when something comes up, you are able to cover the expense without dipping into money that is allocated for other purposes.
Budgeting is truly about being intentional with where your money goes. Once you figure out that budgeting isn’t meant to limit your freedom, but instead creates freedom, you’ll be on the road to loving your life and your bank account!
Did you find these ideas helpful? Have you already used similar ideas, and if so, how did they help your finances? Follow us on our City Girl Savings Facebook page and join in the conversations. Like and follow us on our Twitter and IG @citygirlsavings!