5 Tips to Make Budgeting Easier
Budgeting doesn’t need to be complicated. It’s about finding a system for your money that works for you. Some prefer to call it a spending plan or wealth plan or something else that feels good to them.
Most people go throughout their lives stressed about money or if they do create a budget, it’s unrealistic. We often think we don’t spend that much on groceries or takeout, but they show a different story when we go over the bank statements.
Creating a budget is about taking control of your money so you can have more freedom. It’s not about cutting back on everything and having no fun.
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1. Know Your Real Income and Expenses
One of the biggest mistakes I see people make when it comes to their budget is they estimate everything and they are incorrect with those estimations.
Get out your bills and bank statements so you can see clearly where you spend money, how much it is and what you need to plan for. Include your annual bills such as insurance, registration, school fees, sports fees etc.
Add up how much you are really spending on food over the week, clothing throughout the year and entertainment. These tend to be areas people think they spend less than they actually do.
If you don’t want to do all that, you could use an app to track, budget and plan such as WeMoney.
By outlining your proper expenses, you can create a plan you can stick to. You’ll also be able to identify your weaknesses and if you are spending more than you earn, you can make a plan to change that.
When we spend more than we make, we are constantly in debt and stressed. There are only so many ways you can cut back, once you have looked at what you can do to spend less, you need to focus on increasing your income.
2. Know Your Weaknesses
We all have weaknesses, and knowing what yours are will help you create the right system for you and enable you to put things in place to help.
Whether it’s takeaway, spending too much on groceries because you buy everything you want instead of what you need or spending on clothing etc. There are things you can do to reduce overspending.
Firstly, find out the root cause of your need to spend. Are you buying takeaway because you are working long hours and are too tired to cook? If so, can you cook a few things one day so you have meals for a few days or maybe cook and freeze some meals?
Is it emotional spending and seeking a dopamine hit? How can you get that feeling in other ways? Things such as working out, cleaning, music, dancing etc all raise dopamine without blowing the budget.
Knowing why you are spending and putting things in place to prevent you from falling into those habits is essential.
3. Choose Your System
Create or choose a system to manage your money. There are many budgeting systems out there for you to choose from. What they all come down to is knowing how much you earn, how much you spend, investing and making sure you are spending less than you earn.
Whether you like The Barefoot Investor’s 3 bucket system or want to do something more in-depth such as the budget system from Money With Jess, it is up to you.
Some people prefer to do the cash envelope system which has been around forever. It’s likely what your grandparents and other ancestors did but you didn’t know it.
The cash envelope system is where you work out your expenses, divide them into cash envelopes each pay and spend only what you have available. It helps people see how much they are spending, where they have leaks and teaches better money management.
Having the cash in front of them makes it real instead of simply swiping your card. However, as so much is paid online now, it might be easier to set this system up using multiple bank accounts.
Your budget can be as simple as having all your expenses listed, looking at ways to cut back and then automating as much of it as you can so you don’t have to deal with it.
If you have never budgeted before, it can take a little juggling to get used to it and have it working well but it is worth sticking to it. Eventually, it gets easier and when you are in control of your money instead of your money controlling you, you will feel so much more freedom.
4. Make It Easier: Automation and Reminders
My preference is to have direct debits set up or at least a remind in my phone to pay a bill before it is due.
When money hits my account, it is split up into different accounts for different purposes such as bills, investing, debt, specific things I am saving for etc.
Rent, insurance, business expenses and similar are automated. As are my savings. When it comes to investing, that’s done monthly from a specific account and I have a plan so it is easy to follow.
The more automated my money is, the less I have to stress and worry about it. It took a little bit to get set up years ago but it was worth it.
Now, I check my accounts in the morning and evening to ensure the transactions are correct. We have a weekly budget meeting (I call them abundance meetings as it makes me feel wealthier) and my kids know whats happening with my money too.
It is simple, everything is paid for and my financial goals are achieved.
5. Implement Things to Stick to Your Budget
I mentioned weaknesses and automation but those aren’t the only things you can do to stick to your budget.
Years ago, I was a compulsive spender. I blew threw money and had nothing to show for it really. At one point, this resulted in debt and I felt awful.
A Delayed List
One thing that helped was implementing a delayed gratification list. When I saw something I wanted, it would go on the list. If I still wanted it 30 days later, I could look at budgeting it in.
Most of the time, it would have been an impulse purchase and I didn’t really need or want it. More often than not, I forgot about it by the time I could get it and it didn’t matter.
Splurge/Sanity Money
Having a percentage of my money to spend on whatever I want prevented me from blowing my money because I felt restricted. We all work hard and deserve to do things just for us.
It’s up to you to decide how much and what that money is to cover. In some families, this money is to cover all extras such as coffee out, lunches at work etc. In other families, those things are part of the budget and this money is for whatever you want that isn’t covered.
Most people go with 10% but do what works for you.
Have a Goal
It is much easier to stick to the budget when you have a clear goal. Whether it is going on a holiday, clearing debt, buying a new car or a house, goals give you a reason to stick to your budget.
Get a savings tracker or put us some images of the things you are saving for to help keep you motivated.
You Didn’t Save if You Didn’t Need it
Spending money you don’t have to buy something just because it is on sale when you didn’t need it isn’t saving money. You spent money.
Buying because something is on sale is a trap many people fall into thinking they are getting a bargain or they should buy it now so they don’t pay full price later. There are loads of ways to get discounts, cash back etc plus sales go in cycles.
Plan your spending, stick to your budget and only buy what you intend to.
Final Tip
Budgeting is about freedom and achieving the life you want. Instead of viewing it as restrictive or controlling, view it as a way to achieve your goals and live life your way.