5 Ways to Effectively Budget
The key to building wealth and establishing good habits.
Good morning Everybody!
You might have learned something about budgeting in your personal finance class in Highschool. But from my personal experience, it probably didn’t resonate with you and keep you from building good money habits.
Today I want to give you five realistic ways that will help you budget and spend your money. Unfortunately, most Budgeting advice is generic and doesn't apply to the individuals who struggle with this issue. So I’ll do my best to make this as applicable to you as possible.
(hopefully, this will help me as much as it can help you.)
Create goals for savings and budgeting
Yeah, yeah, yeah, I know, generic, right. But without having a defined goal of what your savings towards and what you are budgeting for. It can get really demotivating, and you’ll often find yourself falling short of your mental expectations. But this can be avoided if we simply write down ( yes, pen or pencil on paper) our goals.
No need to create complicated spreadsheets on excel and spending accounts ( unless you want to, of course, I'm not gonna be the one to stop you ) But have a goal defined, whether that be paying off your student loans, credit card debt, or just saving for a rainy day.
Write down the amount you need to save and plan out how much you can spend. It might feel config at first, but counterintuitively, you’ll find that it’s more freeing knowing you’re on the right track and that you’ve counted all your money.
2. Know yourself
Only you know what triggers you to pull out your wallet. Many of us go about in life without having the faintest clue about why we really bought that new pair of shoes when the pair before had nothing wrong with them.
Identifying the problem and having a plan to counter your natural instincts of swiping your plastic will go the longest mile to getting to your budgeting goal. Unfortunately, it’s pretty common to feel like you have more money than you do, and it gets most of us in trouble.
3. Lower your expenses
Another obvious one, but if you're serious about reaching your budgeting goal, then you should definitely consider doing what you can to lower your money going out. Buy off-brand groceries and goods. ( not very glamorous or stylish) It’s essential not to overpay; you can keep buying those Gucci shoes or YSL bags but just know that you are entirely paying for a name on the product.
If you drive to work every day, gas can really cut into your budget. (especially now) Try public transportation if it’s available for you or carpool. Again, this isn’t the coolest move, especially considering our society. But you know what is cool? Retiring early.
Cut your subscriptions. Nobody really needs a Netflix, Hulu, HBO max, Peacock, and Prime Video subscription. As of right now, you can still bum off other people's accounts, and that’s alright. But try reading a book or finding a different, more productive hobby.
4. Know where every dollar is going
This is a lot harder than it sounds, but it is vital. If you don’t have your income allocated for what you can spend, some purchases might slip through the cracks. Added up, and it’s probably what is killing your savings.
I personally use TrueBill (the app, no, not sponsored); it works great for everything I need. That includes spending categories and upcoming bills, and they’ll even cancel your subscriptions for you.
5. Get someone involved
Whether that be getting a budgeting buddy or just having someone to keep you accountable for your purchase, it will go a long way.
A problem that some of us have is that we now have the right to spend money on whatever we want since we're grown up and adults. Sometimes even emotionally spend money on things we couldn’t get as a kid.
Get someone who you can report back to, and that will encourage you; this way, you know that you can’t just blow your paycheck because you’ll have someone counting on you, and vice-versa.
To recap, we have:
Create goals for saving and budgeting
Know yourself
Lower your expenses
Know where every dollar is going
Get someone involved
There are many other tips and tricks, but I found these to be applicable to my life, and I hope they can do the same in yours. If you have any other topics you’d like us to cover, leave a comment, and we will be sure to get to them.
Have a great day, and keep your money to yourself :)