Creating a budget can be a difficult process, but sticking to it can be even harder. It is a necessary part of running a household, but if you don’t do it properly, then your finances will go down the pan.
Learning how to budget in a way that works is something that everyone should be able to do, whether they have a family, a business or just their own household to run.
Take a look at these hints and tips to making your budget work for you.
Setting Up a Budget
The problem that most people encounter when setting up a budget is figuring out what they actually spend. The majority of us don’t keep our receipts, unless for this purpose – for keeping track of what you’re spending. So, for the next three months – assuming you’re not under any major pressure to save – keep every receipt and make a note of everything you spend. After three months, take all your receipts and group them together. How you do this is up to you, but after you group them, you total it up and divide it by 3. Then, take a look at where you can cut spending. In some groups you might find that you can’t cut anything, and in other areas there might be quite a lot.
You should try not to cut out everything all at once. Instead, just choose a few ways in which to cut spending to see how it works for you.
Sticking to Your Budget
Whether you’re budgeting to save or to pay off debts, then you should have a goal in mind. Keeping track of this and your progress as you get closer to it is a good incentive to keep going with your budget.
Using cash – if you set your budget for your individual groups, and you don’t buy anything online, then get the cash out. Once it’s gone, it’s gone.
Become critical of your spending – before you buy anything, ask yourself whether you need it and whether you have looked to see if you can find it cheaper elsewhere. If you’ve decided you need it, and you’ve found the cheapest one, sleep on it just to make sure.
Lock your savings away – if you find yourself reaching for your savings accounts every money gets scarce, then make sure you can’t by locking it away in an account that charges you when you withdraw.
Reward your efforts – though make sure it’s a reward that you’ve budgeted for!
Have a plan for your debts – if you’re budgeting to get out debt, then make sure you have a plan for your debt too. You could consolidate your debt with a loan like the ones from 1st Stop, or enrol with a debt management organization. Budgeting alone won’t help you when it comes to debts.
Don’t bear the burden alone – assuming you have kids and a partner, make sure that you’re not the only one who’s committing to cutting down the spending. Educate your kids on money matters, and make sure your partner is sticking to the budget too.