Usually, when people think of budgets, they see exhausting visions of spreadsheets and empty pockets. It’s no wonder that the average person doesn’t spend their week looking forward to a budgeting session. The good news, however, is that just because budgeting might not be a riot, doesn’t mean that it has to be exhausting either.
Most of the time, budgeting comes down to following a few simple rules – and they’re not based entirely on depriving yourself. Having an effective budget in place doesn’t mean stopping yourself from buying everything you want. It doesn’t even have to mean spending every day counting the pennies that you spend. Here 5 basic guidelines you can keep in mind to change the way you approach budgeting.
1. Be Realistic
Budgeting isn’t just about being insanely frugal. Instead, all you need to do is start off by being realistic. If you’re currently spending over $500 a month on groceries, then you probably won’t be able to cut down to just $100 a month by next week. You’re going to need to start by taking small and simple steps. Try reducing your budgetary spend to $400 instead, then $350. Every little change can make a big impact in the long-term.
Not only will setting realistic goals improve your chances of success, but it will also mean that you’re less likely to deprive yourself too much as you go forward. The more you tell yourself that you can’t have anything, the greater your chances of falling off the wagon.
2. Keep it Simple
When it comes to better budgeting, less is more. That doesn’t just mean that the less you spend, the better off you are. A lot of people who are creating their budget for the first time make the mistake of assuming that their strategy needs to be comprehensive and complex. However, you don’t need to sort your money into endless categories. Rather than having a budget for lunch, dinner, breakfast, and meals out, lump everything together in the same food budget.
If you want to simplify things, you can even just focus on three separate categories: savings, essentials, and non-essentials. That’s the strategy that many people use when they embrace the 50/30/20 budgeting plan.
3. Don’t Go It Alone
Unless you’re the only person in your household that spends and earns money, there’s no reason that you should be tackling your budget alone. Everyone who has a part to play in the financial health of your family needs to be included in the budgeting discussion. This will include both your partner and any kids who might be old enough to understand the basics of money.
Bring everyone together for a regular discussion about the progress that you’re making towards your financial goals. What’s more, ensure that everyone agrees on what those goals should be. If you’re divided, then you’re struggling to reach your targets.
4. Avoid the Trends
There are plenty of different tools and programs out there today that claim to help with your budgeting strategies. Some of them are useful, like the ones that automatically track the money coming out of your bank account. Other tools are just going to make your budgeting strategy seem even more complicated.
If you prefer the idea of tracking your budget with a piece of paper and a pen, then there’s no reason why you can’t stick to the old-fashioned route. The tools are there for you to use if you want to – but they’re not guaranteed to help you save money better or accomplish your goals faster. Try the trends out if you want, then go back to the basics if they don’t work for you.
5. Adjust Your Budget Every Month
The average budget will almost always end up with two columns – the amount you want to spend each month, and the cash that you end up using. The more you check the details of your budget each month, the more you’ll be able to learn about how the reality of your financial situation differs from your goals. Sometimes, you’ll just need to be a little stricter with your spending habits. Other times, if you’re constantly spending over your estimations, it might be a sign that you haven’t been realistic with your predictions.
Regularly adjusting your budget will also mean that you can account for any changes that happen in your life. After all, everything from a promotion at work to a sudden and unexpected expense can change everything you thought that you knew about your money.