When thinking about budgeting, what usually comes to mind? Perhaps words like constraint, spreadsheets, or burdensome appear in your thoughts. Budgeting may seem bothersome or even intimidating, but it brings numerous benefits. The purpose of a budget is not to restrict the money you spend. It is to guide you in spending money on the things that hold the most value to you, allowing you to create the life you desire.
For some individuals, creating a budget can be relatively simple. The challenge lies in adhering to it. Personal finance is, well, personal. Everyone manages their finances uniquely. The key to managing your money effectively is by using a method that suits you best and, more importantly, a budgeting approach that you can stick to, enabling you to achieve your objectives.
How To Stick To A Budget
Establishing a budget requires patience. Maintaining a budget requires practice. Adhering to a budget demands discipline. If you find it difficult to stick to your budget and are seeking practical strategies to assist you, look no further. Here are five tips to help you handle your budget and attain your financial goals.
1. Define Your Objective
The initial step in staying committed to a budget is to clarify your goals. What financial objectives do you aim to accomplish? Whether it’s clearing credit card debt, building an emergency fund, or planning a vacation, having a clear direction is essential. This allows you to create a budget that aligns with your goals—understanding the “why” behind your goals serves as a powerful motivator in reaching them.
It’s easy to overspend in our day-to-day lives due to the allure of instant gratification from buying things we desire. Yet, envision the satisfaction of being debt-free or enjoying a drink on a beach. Keeping your goals in focus helps you stay on course. There is an array of excellent budgeting apps available to keep your goals at the forefront.
2. Select a Budget That Fits You
The optimal budget for you is the one you can adhere to. Kendall Meade, Certified Financial Planner at SoFi, excels in helping individuals manage their finances effectively. Kendall suggests, “There exist various budgeting methods, and what we find is that diverse budget types are better suited to distinct personality types.” Kendall recommends three different budgeting strategies, including the line-item budget, the 50/30/20 budget, and the pay yourself first budget. Here’s a brief overview of each:
Line-Item Budget
“A line-item budget is what comes to mind for many when thinking of a “typical” budget. To initiate your line-item budget, list each expense, or category of expenses, over a defined period, such as a month or a year. Subsequently, establish a target amount for each item, ideally based on your goals and past spending,” explains Kendall. She advises examining your last three months’ spending and categorizing each transaction into a line item. Throughout the year, evaluate your expenses to ensure you remain on track. Kendall noted, “As a detailed approach, a line-item budget can be beneficial if you are detail-oriented or prefer greater control over your expenditures. The downside of its detailed nature usually lies in the time investment required for setup and upkeep.”
50/30/20 Budget
The 50/30/20 budget divides your monthly income into three categories based on differing percentages: 50, 30, and 20. 50% of your income goes to needs, 30% to wants, and 20% to financial objectives like savings and debt repayment. “The 50/30/20 budget is straightforward and encourages a holistic view. Because it does not delve into extensive details, it could be ideal if you are busy or simply uninterested in minute spending particulars,” explains Kendall Meade. “However, if your budgeting objective is to take charge of your spending, this method might not be as effective, as it does not pinpoint areas for spending enhancements.”
Pay Yourself First
This budgeting approach is the simplest of the three, focusing on allocating funds toward your goals while overlooking where the remaining money goes. Kendall shares, “Suppose you decide to save 20% of your net pay. The remaining 80% becomes your spending target for the month, and as long as you stay below that target, the exact utilization of funds is not a primary concern. Due to its simplicity and minimal maintenance requirements, this could work well if you are extremely busy and seek a straightforward target for tracking progress.” Since this method is less detailed than the 50/30/20 budgeting technique, it may not be as effective for establishing long-term spending discipline, according to Kendall’s recommendation.
Hold Yourself Responsible
To sustain something, accountability is vital. Creating a budget is one thing, but regularly monitoring your spending and savings is crucial for sticking to your budget and reaching your financial milestones. If you anticipate needing support, find an accountability partner. Schedule routine financial check-ins with yourself or your partner to review expenses, progress toward goals, and credit card and checking account balances. If you notice excessive credit card usage, switch to using your debit card to limit spending to available funds.
Another tip for maintaining accountability in your budget is planning your weeks. Set a goal to organize a grocery list to help you adhere to your grocery budget. We are all aware of the temptations at shopping centers where a few items transform into a full cart. The same holds for grocery stores (especially while shopping on an empty stomach). Adhering to a budget is a skill that requires practice, but it is worthwhile in achieving your goals.
Remember, a budget is not intended to be confining; rather, its purpose is to guide you in spending money on what matters most to you, reflecting values-based budgeting. If you attempt a budgeting method that doesn’t work, be open to change. As per Kendall Meade, “Budgets can and should evolve over time, so you may need to reassess what is or isn’t effective and make adjustments. If one budgeting method doesn’t suit you, try another one.”
Pause Before Major Expenditures
Large purchases not accounted for in your budget can disrupt your financial plan. When working towards your goals, it is wise to avoid hasty decisions on significant items. You have the discretion to determine what qualifies as a large purchase, whether it’s $100 or $1,000. Implementing a pause before purchasing can be beneficial. “If impulse purchases pose a challenge for you, consider incorporating a waiting period for non-essential buys. This waiting period can range from 24 hours to a week or longer, depending on the purchase amount,” explains Kendall Meade.
If you feel your budget is overly restrictive, leading everything to seem like a major purchase, consider reevaluating and practicing moderation instead of total expense reduction. “Oftentimes, eliminating something entirely may result in overcompensation and overspending later,” says Kendall Meade. “Rather than completely cutting out buying coffee from a café, limit it to once a week and opt to make it at home the other days.”
Celebrate Your Achievements
Remaining faithful to a budget is demanding and necessitates dedication and attention. Yet, there’s nothing quite like the feeling of accomplishing your goals. Maintaining a budget is an ongoing process. You may likely uphold a form of budgeting throughout your life; hence, acknowledging your achievements along the way is essential. When you reach a financial milestone like paying off debt, establishing an emergency fund, commencing investments, or consistently meeting due dates, take a moment to appreciate the accomplishment. You are progressing towards your goals, and that’s significant! Setting aside a plan to celebrate once you achieve a particular milestone can be the encouragement needed to stick to your budget. You deserve to be proud and content with your successes as you strive for your version of financial triumph.
