Find a method that works for you so you can stick with it.
Setting a sensible budget—and sticking to it—is the cornerstone to any successful personal finance plan. Budgeting seems to come naturally to some, but many of us find it challenging to maintain good habits. The good news is that a little forethought and discipline can go a long way, and committing to your spending plan can help ease financial stress and empower you to achieve your goals at your own pace. Here are some pointers to help you stay on track.
You know how some nutrition plans make you keep a log of food intake and habits? Try taking that approach with your spending. Write down a dollar amount for everything you buy so that you have a visual record of where your money goes. When you see this all laid out, you may realize that you’re spending more than you need or want to in certain categories, and you can more easily hold yourself accountable.
Speaking of food, just as it’s important to maintain a healthy diet, you’ll want to give your budget the same level of care. If you enjoy eating out, allow yourself an occasional indulgence, but consider forgoing takeout in favor of making meals at home most of the time. Go the extra mile by buying in bulk and/or doing a week’s worth of meal prep on Sundays.
While grabbing a bite with friends on a whim is tempting, the cost of those outings has a way of adding up. Try to resist the pull of a last-minute get together by planning get-togethers in advance so you can control the pace and setting—and therefore, more of the cost. Also, #FOMO (Fear of Missing Out) can be a budget buster. Realize that it’s OK to say no or suggest more economical plans if you need to.
Whether it’s a new car, a home or getting your student loans paid off, if you can visualize what you’re saving for, it may help you be more disciplined about getting there. Grab a picture that represents your goal and place it in a frame on your desk or make it your smartphone wallpaper as a way to (literally!) keep your eye on the prize.
Treating yourself doesn’t need to break the bank. Instead of dropping a bundle on a new outfit, fancy dinner or other extravagance, find less costly ways to celebrate the small things. Plan a game night, bake cookies or take a walk in the park with a friend.
Enlist the help of a friend, partner or even your child—you can keep each other accountable and stay motivated.
Sticking to a budget is not about depriving yourself. Rather, it’s about allocating your money to effectively cover your needs now and save and invest for the future – while figuring out how much you can reasonably spend on things that add to your quality of life.
Many people find success in the 50-30-20 Rule: budgeting 50% of their income for essentials (housing, food, bills), 30% to wants (entertainment, accessories, gadgets) and 20% to savings and investments (emergency fund, retirement). The key is to find a method that works for you so you can stick with it.