The thought of living within a budget doesn’t have to mean missing out. And it certainly doesn’t mean endless dinners of beans on toast. By keeping track of your spending and not overindulging, you can happily (and easily) boss your budget.
By spending some time planning a budget, you can make smarter decisions about where you spend your money. Learning how to budget is the first step in talking control of your spending to align with your life goals and remove any unnecessary financial anxiety caused by not knowing where your hard-earned dollars may be leaking.
A budget shows how much income is coming in and how much is going out on spending. That makes your budget a great tool to manage your money without having to rely on debt or overdraft notices. The trouble is, we’re constantly being tempted to spend – and that can mean blowing even the best-planned budget.
To help you live within a budget and better manage your money, check out these four tips:
1. Know exactly where your money goes.
When it comes to budgeting, the ‘fake it til you make it’ approach isn’t going to work. The only way to rein in spending and maintain an accurate budget is by understanding exactly where your money goes.
Keep a spending diary for a couple of weeks or use a money-tracking app to get a clear picture of where your coin is going ¬– those Friday night cocktails or a cheeky ASOS purchase can really add up.
2. Allow for some fun.
If your budget is too strict, chances are you won’t stick with it for very long – just like a diet – so it’s important you allow for some fun.
That doesn’t mean keeping up with the Joneses or splurging regularly. Rather, it’s about making adequate room in your budget for lifestyle and leisure, and the things that make life enjoyable, such as a night at the movies or a lovely meal out.
3. Look for ways to cut back without too much pain.
One of the benefits of using a budget is that it can highlight areas where you can save.
If your budget shows you’re burning cash on things like dining out, try having friends over for a more affordable pizza night. Look for ways to cut regular bills too – check to see if you’re getting the best deal on your phone or electricity plan for instance. Even small savings can quickly add up.
4. Ask yourself if you really need it.
Impulse buys and ‘treat yourself’ moments may feel good at the time. But it’s likely the thrill will soon wear off, leaving you lumbered with the cost (and an unwanted case of the guilts).
So make a habit of taking a breather whenever you’re tempted to make an unplanned purchase. Ask yourself if you really need the item. Even if it’s within your price range or on sale, walk away and plan to come back later. Just give yourself the opportunity to pass over a purchase you could regret later on.
5. Review your budget frequently.
As you get used to living within your budget, it’s important to review it regularly to make sure it works for you. Regular reviews every few months will help you sharpen your budget to match your actual spending and lifestyle costs.
It’s important to review your budget when you:
- Get a promotion, pay rise or new job (go, you!)
- Start planning a wedding or big holiday
- Approach retirement
- Have a baby or start planning for a family
- Get divorced or any other major lifestyle change
- Move house that includes a change in rental amount or mortgage payments
Budget reviews can make sure your budget isn’t outdated and reflects your current income, expenses and goals.
Start budgeting today.
Follow these five simple strategies to help you avoid budget burnout. And remember, if you blow the budget occasionally, it’s not the end of the world. Just be prepared to fine-tune spending elsewhere until your budget is back in the black.
What’s most important is you start taking notice of where your money is being spent, so you can make sure it lines up with your financial goals and values. Then once you’ve nailed general budgeting, you can look to other budgeting strategies like bucket budgeting (a modern version of envelope budgeting) to level up your savings game.
This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.
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