Everyone needs a budget. Without one, your household finances can quickly fall apart, leading to late bill payments, bank account overdrafts and financial stress. While it’s easy enough to put the numbers down on paper, staying within your budget can be difficult, especially if you’re a spender. If you’ve tried a typical budget but it’s just not working for your lifestyle, here are a few tricks and techniques that may help.
1. Be Realistic
The No. 1 reason that a budget fails is because it’s simply unrealistic. If you know you spend an average of $800 per month on groceries, don’t set your budget at $500. If you do, then you’re doomed from the start. It’s easy to think that, because you’re budgeting, you’ll spend less money and should set your budget lower. While that may be true in the long run, your initial target should be close to what you usually spend. When you’re making your budget, look at past spending trends. You can either set up your first budget to include those same amounts or — if you’re feeling motivated — cut a few categories by 10 percent. If you stay within budget this month, cut it by another 10 percent next month. This is much easier than trying to hit your target amount all at once.
2. Simplify Your Budget
Many financial advisors recommend intricate budgets that require budgeting every dollar, separating all your funds into specific categories, and using envelopes to keep your money separate. Oftentimes, this just doesn’t work for spenders. The categories are too confusing and complicated, so you give up on the budget completely. Instead, try simplifying your plan. There’s a popular minimalist budget idea that only includes three categories. You put half your money aside for essentials, such as bills and food. Thirty percent of your income goes toward personal expenses (and fun money!), and the remaining 20 percent is used for savings. This is a great plan for getting on track without getting bogged down in all the details.
3. Use Separate Accounts
Whether you use the minimalist budget or a more traditional version, it’s a good idea to have separate bank accounts for your funds. Each time you get paid, move the money you need for bills into a separate checking account, then move some into your savings account. Whatever’s left in your regular checking account is yours to spend as you wish. With this method, you never have to worry about spending your bill money or your savings because they’re out of sight and out of mind. You can even set up an investing account through one of the online investment sites to help you better track your investments.
4. Think Short-Term
For some people, a month is a long time. Why not try shortening your budget goal? Can you stick to your budget for three days? Give yourself incentives for staying on track. For example, if you stay within your budget till Friday, you can treat yourself to a nice dinner out. As long as you choose incentives that fall within your budget, short-term goals are a great motivational tool for staying on track.
5. Spend Intentionally
This is the trickiest method to master, but it’s also the one that works best. If you truly want to stop reckless spending, you need to change your mindset. Spenders walk into the store for one item, see a dozen other items they like and throw them in their shopping cart. If you want to stop spending, you need to be more intentional with your purchases. With every item you want to buy, take time to consider whether you really need it. Ask yourself: How will your life be in a week if you don’t purchase this item? Will you regret it, or will you forget you ever saw it? Most of the time, it’s the latter. This technique can be difficult to remember at first, but once you get the hang of it, it becomes second nature. Once you’ve conquered your spending habit, you’ll see more and more wiggle room in your budget.
If you are in debt and need help with it, check out a debt relief company like Freedom Debt Relief, which can help you negotiate your debt and even lessen the amount of your debt through negotiation with your lenders.