10 Steps to a Better Budget
New year, new you? The start of a new year is as good a time as any to get a budget established. Below are 10 steps to help you be successful in building a budget that will work for you and won’t leave you feeling defeated. Set a goal you can keep in 2023!
10. Start Fresh
If you have a budget and it isn’t working, scrap it.
Start with the basics. How much do you spend on bills? How much are/would you like to invest? How much would you like to save and spend? Once you’ve divided up your money into those basic categories, you have a pretty good foundation to build a more specific budget.
9. Account for EVERY Dollar
You’ve probably heard the phrase, “every penny counts.” It’s not a household phrase for nothing. It’s right on the money. Account for every dollar you make. This might be where budgets get their notoriety in being too uptight or stringent, but all it ACTUALLY means is that you should “spend” all your money in your budget each month.
Spending doesn’t necessarily mean in the consumer sense. It might mean you could spend that dollar on saving or putting toward a 401(k).
8. Focus on What Really Matters
When making your budget, think beyond the basics of rent, food and utilities. As you think of Maslow’s Hierarchy of Needs and your budget, remember that your physiological needs (such as food, clothing and shelter) are most important, followed by safety (insurance, utilities), and so on. The luxuries as the top being the least important.
7. Rank Your Debt
If over the years you’ve accumulated some debt, and most people have, take an extra long look at it. Prioritize your debt and use the debt-reducing tactics that fit your situation to get out of debt faster.
6. Track Your Spending
Knowing where every dollar goes is paramount to successful budgeting. Use your online services and financial apps to your advantage to make sure you can account for everything you spend.
5. Find Tracking Techniques that Work for You
Of course people have different ways of saving and handling their finances. This is no different. If you find something isn’t working for you, try something else. Roswell Credit Union offers online banking on your PC and Mobile Banking for your phone so you can see exactly where your money is day or night.
Sometimes a spreadsheet is all that’s needed or maybe you want to go a little more physical. Using separate accounts often helps some people see exactly how much they can spend.
4. Give Yourself Some Spending Space
Life is unpredictable and we need to be flexible! If you budget too meticulously, it will induce stress and the budget will ultimately fail. This is where our New Year resolutions fall apart. Stash enough money away for those expensive unexpected moments but also budget some money for fun.
Prone to splurging? Create a budget for it to avoid overspending. Or allow the use of money after other goals are accomplished. However you do it, just make sure not to neglect the fun!
3. Know What Makes You Weak
Maybe it’s new expensive toys, your morning latte, or eating out. We all have weaknesses and as you build your budget, give special attention to the areas you know you’re weak. Recognizing these weaknesses can give you more power to beat them in the long run.
2. Nothing Is Set In Stone
Your first budget might not be “The One.” That’s okay! Life is ever changing and your budget should too. If something doesn’t work, change it. The great thing about having a budget is you can change it when you need to and the old adage is true, practice makes it better (maybe not perfect, though).
1. Stay Strong and Stick with It.
Budgeting isn’t the most glamorous, we get that. However, by creating and sticking to one, you can seriously change your daily decisions and your overall financial health.
Keep with it. This is the most difficult part of budgeting. Keep track of your budget each and every month, wait 48 hours before making any big purchase, and perhaps most importantly, accept that every once in a while, you will trip up and that’s okay.
Now get out there, start building a budget, and see what a little money management can do for you!