If you are like most people, budgeting is awful because it leads to guilt and guilt leads to more spending. Here is a great tip. Stop wasting your time tracking things that despite budgeting haven’t changed.
Budgeting to most people what dieting is. To track your expenses to get to a goal you love to hate. As long as you associate your spending to your failures, it’ll never work. Instead start linking it to your successes or goals that matter to you, that inspire you and make you feel good. If you want to go on a great vacation save for it, if you want an 8 feet wide TV in your living room, save for it. Stop wasting your time making plans for things that make you feel awful about budgeting and spending. It is also important to note that better the better you save the better you are off come retirement time, the best IRA accounts are always changing so it is important to be up to date on that. Here are some tips on the best ways to save money.
Do it together:
If you are married or cohabitating with a partner, make sure that you do the budgeting together. This way you will have buy-in and a group ethos of being in this together. Along with the motivation and the goal setting, it also works well as a building exercise of something together and less of enforcement of rules from one party to another.
Survival Categories come first:
Begin your budgeting with what is called the 4-wall principle. Start your budget with food, shelter, utilities, and basic clothing and transportation. This should roughly comprise about 50% of your take-home income. If you can get this done give yourself a pat on the back, most people do not often know what these four things are costing them. Keeping your luxury or entertainment expense out of this portion gives you a tremendous amount of freedom to be sure you can handle other expenses.
Dealing with Debt is Essential:
One of the biggest issues that unbeknownst to you create a financial nightmare is an out of control debt. Most people think of debt as an invisible burden that slowly robs them of their freedom, their happiness and their peace of mind without them knowing it. It is important to know that if it took you a while to get into debt it will take you longer to get out of it. You will have to do it in ‘Baby Steps’ to get out of your debt. Here are some basic ideas:
- Create a $1,000 emergency fund and deposit in a separate bank account first.
- Line up all your debts, excluding your mortgage, from smallest to largest.
- Start by trying to pay off the smallest while paying the minimum payment on all other debts.
- Imagine how a specific debt robs you of mental peace and use the image of stress-free as a motivator.
Make Small Temporary Sacrifices to Get a Handle on your budget:
Most people consider making temporary sacrifices into a setback. Cancelling your cable for a few months or eating out less is a lot more palatable if you think of it as a temporary measure and be able to see the impact of such action on the overall quality of your life and equate the satisfaction you get from that expense versus the expense to consider resuming the expenditure or blot it out of your expenses for good.
Keep the Paper, Cut the Plastic:
You can do it all; make a budget, stick to it, get rid of your debt and invest in your future. But, no if you keep on shooting yourself in the foot. And racking up credit card debt is a sure fire way of doing so. Some financial websites will tell you to use as much plastic as you can to keep a record of what you’ve spent, but not if you keep on overspending and straying away from your budget when the banks keep on reeling you in a debt trap by upping your credit limit.
So, make sure to use as much cash as possible. Sure, it is inconvenient and downright vintage to use checks and cash, but if that is what it takes or even an envelope system to keep you in the good graces of the budget gods, that is exactly what you do.
In conclusion, you have all the capacity of making a budget and sticking to it, the key is it must be something you plan on doing and love to do rather than being guilt into by yourself or someone else.