How to Actually Commit to a Budget: 7 Tips for Success
Making a budget generally the easiest part of getting (and keeping) your finances on track. It’s sticking to the budget you created that can be tricky. Remember: the whole point of setting up a budget in the first place is to help you meet financial goals, and like any kind of goal, financial milestones take work and effort to achieve.
The good news is that if you keep some ideas and tips in mind, sticking to your budget can be a little easier than you might think. If you have a history of failed budget-setting or have recently set a new budget for yourself or your household, here are some things to keep in mind.
1. Make sure your budget has a concrete goal
Hopefully, when you started your budget, you went into it with a goal or plan in mind; debt you wanted to pay off, a certain amount of emergency funds you wanted to have in savings, a down payment you were hoping to save for, or a big vacation you were hoping to take in the next year. Whatever it was, it’s important that you have some kind of goal in mind and, more importantly, that it’s a concrete goal. Be specific. Do you want to save $15,000 toward a down payment or $30,000? Do you want to take a vacation to a local national park or to a luxury resort in Fiji? Calculate the amount of money you want to put away, down to the details, and over-estimate.
Furthermore, if your goal is a lofty one — say, one you probably won’t achieve for several years (let’s say you have a lot of debt to pay off, or you’re saving for something big like a down payment for a house) — set milestones for yourself. They’ll act like mini goals and help spur you on. Again, be specific: do you want to save $200 a month or $500 a month? In three months, how much should you have saved? And so on.
What’s the reasoning behind having all the details of your goal ironed out ahead of time even if you might not reach it for years to come? Well, think about it: saving for the sake of saving isn’t really very motivating. On the other hand, if you know what you’re trying to achieve and how much you need to get there, every time you put money away, you’re able to see your progress toward that goal. That’s quite a bit more rewarding than if you’re just haphazardly saving for “a rainy day.”
2. Guess what? There’s an app for that
If you look at a lot of the current wisdom regarding budgeting these days, a lot of people will tell you to write down every single purchase and expense in a notebook. Yes, it’s 2014 and people are still telling you the best way to budget is to handwrite everything. Now, I’m not knocking the old pen and paper, but in the age of smartphones and smart cars, I can’t help but feel that handwriting all of your purchases down in a notebook is a little … antiquated. Let’s step into the 21st century, shall we? In 2014, there are a plethora of personal finance and budgeting apps out there, and if you have a smartphone, trust me, you should absolutely take advantage of it.
One of the most widely-used finance apps out there is Mint. It’s a free app that works for both iOS- and Android-powered phones, and you can access your account on your computer, too. The great thing about apps like Mint is that all you need to do is set your budget for the month, and Mint will categorize your spending and then alert you when you’re close to reaching your budget for a given category for the month. The app also sends out alerts for things like high spending or low balances. Even niftier, you can hook up your checking, savings, and credit card accounts to Mint so that you all the information you’re looking for in one place at a glance.
One downside to Mint and certain other personal finance apps is that unless you check the app everyday, you can continue to be blissfully unaware of your budget until it finally sends you an “over-budget” notification or a “high spending” warning. No worries, though, there are plenty of other finance apps out there, including Level Money, HelloWallet, Dollarbird, Moneywiz, Homebudget, and more. BUDGT is another super popular app, which gives you a clear view of what your “spendable” money looks like on any given day. Joanna, of Our Freaking Budget, a blog dedicated purely to home budgeting, says she swears by a combination of both Homebudget and Mint. She reviews some of her favorites here.
All that said, if you find the best way for you to keep on track with a budget is to tackle your expenses old school, by all means. It’s a tried and true method that’s super simple. Just make sure to log your purchases in a notebook every night before you go to bed, so you can see where your money is going, and be sure to save all of your receipts. With this method, Investopedia cautions, you really do have to commit to writing every purchase down, even ones you know you shouldn’t have made. “Don’t skip writing down expenses because they don’t match up — own your purchases and then move on.”
3. Keep a realistic outlook
By which we mean leave room for some fun stuff. If you make your budget too restraining, it’s going to stress you out and probably affect your family and social life to a certain degree; after all, the number one reason couples fight is over money, and 33 percent of those fights are about budgeting. Amy Fontinelle of Investopedia.com cautions that even if your budget is so tight that the most fun you can afford is to buy ingredients to make some chocolate chip cookies, you should definitely still make the cookies.
Further, allow room in your budget for friends and hobbies, to a certain extent. For instance, if you know that you always go out for drinks with friends on Friday or Saturday night, don’t pretend like just because you started budgeting you’re going to stop going. Let’s face it: not going to happen. Besides, good friends are important, and so is your time with them, so include this in your budget and instead focus on more extraneous spending — spending that doesn’t happen on a regular basis. If you normally spend $25-50 every week out with your friends, fine. Total that up for the month; there’s your “going out” allowance.
Along the same vein, it’s okay to do something fun and put away a little less occasionally, especially if you’ve been on your best budgeting behavior. Joanna of Our Freaking Budget says she gives herself a “reward” for three months of good budgeting habits, and allows herself to spend a little more in the fourth month.
4. Evaluate your budget often
You might find that the budget you started with six months ago isn’t really working for you anymore. If that’s the case, it’s a good idea to re-evaluate, and you may even want to think about taking some time every few months to sit down and assess where your money has been going to see if your budget still works for you.
There are all kinds of reasons why your budget may suddenly become less effective then maybe it was at the start; maybe you went back to school, moved, took a new job, lost a job, or someone in your household did. Maybe you’re now a vegetarian and you need less money for groceries; maybe you picked up a new hobby and need to re-allocate funds to allow you to pursue your new passion. Who knows. Point being: things happen, so your budget needs to be able to change with you.
5. Don’t be afraid to make adjustments; allow yourself to be flexible
“If you want to spend more on groceries one month because you’re having a party or craving something gourmet, there’s nothing wrong with that. Just spend less in another area to compensate,” says Amy Fontinelle of Investopedia.com. She adds that, “If you don’t reward yourself, it will be emotionally difficult to stick to your budget in the long run.”
This tip piggybacks on our comments about “allowing for some fun stuff,” like date nights or going out with friends. True, it’s important to allow yourself to have some fun so your budget doesn’t turn you into a total wet blanket, but be sure that you’re making up for the fun stuff by cutting back in other places. Budgeting often requires prioritizing; going out an extra night this week? Planning a birthday party for a friend? Make up for it by not spending money (or spending less money) on clothes or entertainment that month. Whatever you spend extra in one category has to come out of another. What goes up must come down, my friends.
Further, if you’ve recently started a budget and you find you’re consistently going over-budget in one or two categories, maybe you need to re-adjust. Consider budgeting more for those categories, and reducing your budget for other spending areas where you’re consistently under-budget.
6. Meal plan like a mommy blogger
Chances are if you’re in college or fresh out of college, meal planning is not in your vocabulary. Regardless of your age, though, if you find you’re spending more on groceries than you’d like or you haphazardly go out to eat more often than is really financially sound, listen up: meal planning can be a lifesaver. The mommy bloggers of the world know this already, and this is one area where you might want to take their advice.
Planning out your meals can really be as simple or as complex as you want, but here’s the major point: planning meals ahead of time means you are less likely to go out mid-week because you already have a cupboard stocked with everything you need, and by sitting down to think about the cost of your meals for the week ahead of time, you’ll save money. To start, take a look at features like 10 meals under $10 to gain some inspiration. If you’re buying meat, keep an eye out for sales, and remember that chicken and turkey are generally cheaper than beef (and definitely cheaper than bacon) and, with poultry, thighs tend to be cheaper than breasts. If you’re short on time but want to eat out less, think about investing in a slow cooker; mommy bloggers love them for a reason.
It’s also worth thinking about making more of your meals vegetarian. In my household, we tend to plan for at least two or three of our weekly meals to be vegetarian simply because it’s cheaper than buying meat for every meal. Bonus points: it’s better for the environment, too! Great vegetarian foods for stretching a budget include lentils, eggs, potatoes (and sweet potatoes), squash, and beans.
If you have a family or collaborate with roommates for groceries and meals, consider buying your staples in bulk. Which items are “staples” for you may be different for the next person, so identify easy-to-store ingredients that you use almost everyday. Eat a lot of pasta? Buy that in bulk. Likewise, if you’re a baker, buy your flour and sugar in bulk. The same can apply to seasonings and spices as well. If you really wanna get crafty, you can try your hand at canning produce while it’s still in season.
7. Have someone else hold you accountable, or consider a financial advisor
If you’ve really struggled with keeping to budgets in the past or if you’re planning on putting money aside for something Big and Important (babies, houses, cars, etc.), you might want to consider getting a second opinion. This could even be a close relative or someone else who’s judgement and advice you trust, like a good friend. You don’t have to tell them the nitty gritty details, like how much you spent on what, but if you have someone you think could help keep you on track, open up to them.
There’s also the option to hire a financial advisor. Yes, the hourly rate you’ll be paying this person may seem like a lot, but if they identify a crucial flaw or help you discover a creative solution to help you meet your financial goals faster, it will be worth it because of the money they’ve helped you save.