The discipline of saving money does not come naturally to anyone. It is a skill that you hone through regular practice. Without it, however, it is easy to go beyond your means and end up in debt.
Creating a budget is one of the first and most important tasks you must accomplish to ensure that you have your finances in order. It gives you an opportunity to sit down and get a good grasp of how you are doing financially. A budget lets you see your income and expenses in list format, which makes it easier to find out where you need to cut down and save.
But budgeting without action will not amount to much. A good budget should go hand in hand with smart habits to produce long-term results.
Only Use the Money That You Have
One of the biggest mistakes people make is overestimating their spending capacity for a certain period that they end up barely making ends meet right before their next paycheck arrives. Here are a couple of ways to avoid this.
1. Avoid excessive credit card use
Reckless credit card use lets your purchases slip your mind until reality hits and it is time to pay your bills. The risk in this is that since you used a credit card, you may not have accounted for these expenses beforehand. This leads to needing more money to pay your bills but not having the budget for it.
Using cash whenever you can is one way to avoid this. If you aren’t too keen on bringing cash wherever you go, reloadable prepaid Visa cards can keep you in check. Prepaid cards will only have the amount you have already cashed in, so there is less risk of going spending too much.
2. Sleep on your potential purchases
Impulse purchases are a surefire way to go beyond your budget. A lot of times, you find yourself regretting these, too. Why? It is because you weren’t able to think the decision through before making it.
The solution, then, is to always give yourself time to think about your purchases. When you feel like you really need to have something right now, chances are, you don’t.
Sleep on it and then weigh the pros and cons again the next day. If you can give yourself at least a week to soberly reflect on it, even better! This time is important to help you assess if an item adds value to your life, or if it will simply end up as clutter one day.
A key to staying on budget is to maintain organization in your life. How are these related, you may ask? These are the ways being organized can support good budgeting.
1. Have an expense tracker
Having a budget that you update monthly is important to keep track of the inflow and outflow of cash in your household. However, there are times when little purchases you make on the go are unaccounted for because it is easy to forget these even occurred.
Install a budget tracker on your smartphone that lets you update your expenses in real time. Every time you buy something, you just need to open the app and update the relevant category. It’s just as easy as sending a text message.
Before and after every purchase, you can see how you’re doing budget-wise by simply opening your phone and viewing a summary of your expenses.
2. Make a list of things to buy
Going to the grocery store is dangerous when you don’t already have an agenda. It encourages you to linger and rationalize unnecessary purchases.
Before going to the store, make sure you have written a checklist of everything you need. Then stick to it. Talk yourself out of putting things in your cart that aren’t on your list. Just tell yourself, “If it wasn’t there before, then I don’t need it!”
3. Keep your receipts
It may seem redundant to still keep your receipts when you already have a budget tracker to keep real-time spending in check. But receipts are a great way to reinforce good budgeting habits as they are visual reminders of your expenses.
Also, receipts are important for when you need to return or exchange defective items to stores, which could get you refunds in certain situations. You also need receipts for product warranties that can allow you to get things repaired for free.
Budgeting takes a lot of work and adjustment. However, you have to stick to your budget through thick and thin if you want to achieve your financial goals. When it gets tough, remember that discipline takes you far.