On paper, budgeting for yourself or your household seems pretty straightforward. But sticking to it is a whole other problem.
The boiler breaks down. Or a birthday has arrived, and although it is the same day every year, you only remember it a few days in advance. Or a friend invites you on a last minute trip.
Suddenly your well-developed plans are in ruins. Your budget is tight and your wallet quickly emptied. You start to wonder if it’s worth budgeting – but don’t give up hope just yet. With a few simple tips, you can increase your budgeting skills to deal with unexpected expenses.
DO make a budget first. If you want a chance to live within your means, it’s important to understand A) how much your income is and B) how much you spend each month. If your total expenses exceed your incoming income, then, Houston, we’ve got a problem.
DO experiment with different ways of budgeting. There are a ton of apps that can help you out, so no need to go the dreaded spreadsheet route (unless you’re a fan of it, of course!). Alternatively, there’s nothing wrong with grabbing a pen and paper and calculating your income and expenses the old-fashioned way.
DO NOT wish away your habit of overspending. If you spend too much money, you can get into debt too easily. Store credit, attractive credit card offers, and low-interest loans can help, but only if you know you can afford to pay them off.
DO think beyond the obvious when calculating regular expenses. Recurring costs such as bills, rent or mortgage payments should definitely be taken into account. But the same goes for expenses that may not seem like a recurring one, such as your daily coffee habit or your monthly payday purchases for a new item of clothing or a new gadget.
DO remember the goal is to live within your means, not to punish yourself or cut your expenses to the bare minimum. While living a thrifty life may be appealing in the abstract, sticking to an extreme budget in the long run is likely to prove unsustainable. Allow for some redundancy in your budget to allow for the odd indulgence.
DO NOT be too discouraged if you have exploded your budget. A monthly budget is just that – something to help you plan your spending over the next four weeks and a bit. Use the built-in refresh that it allows, and if at first you don’t succeed, try and try again.
DO think of ways to cut unnecessary expenses. When was the last time you changed your insurance or Internet service provider, for example? If it’s been over a year or two since you last looked at the offers, it’s time to do your research and find a cheaper deal. If you call your provider with this information in hand and threaten to move on, they may even offer you a more attractive plan.
DO think of the piggy bank. This popular budgeting technique involves setting up multiple funds to pay for expected and unexpected costs. Many financial applications allow you to quickly set up piggy banks. If you are not a user of the app, you can have multiple accounts with traditional banks. A good idea is to have one checking account for daily expenses and another for bills, while using separate savings accounts for vacations, long-term savings, an emergency fund, and large purchases. planned.
DO pay regularly into your piggy bank. If you have a rough idea of how much your summer vacation will cost, pay a little bit each month. So come on vacation, no sweat and you can relax and have fun.
DO NOT forget about longer term goals. Whether it’s saving for your own property or planning for retirement, setting aside money each month can help you in the long run. In reality, however, some months it will be more difficult than others. During the holiday season, for example, you might want to reduce the amount you set aside.
DO go off the beaten track. If you are reaching a savings goal, you might want to reward yourself with a treat or help others with a charitable donation. An alternative is to pledge money to an “anti-charity” if you fail to achieve a goal – something the stickK the platform allows you to do that. An “anti-charity” is an organization whose objectives you do not agree with. This option isn’t for everyone, but be creative and think about what will motivate you to reach your goal.
If you are like me, you will find that budgeting is more of an art than a science. No matter how hard I try to stick to the above principles, I don’t always succeed. But a budget doesn’t have to be perfect to be good enough. Be kind to yourself and you will get there, one penny at a time.