Have you ever stayed up thinking about how to make your finances meet? Often times, people tend to spend more than what they make, making purchases that they don’t really need – another shirt, an extra pair of boots, a brand new food processor (as seen on TV!), or fuzzy dice (no one ever really NEEDS fuzzy dice). And it’s at those times that they’d wish that they had more money saved up for the rainy day.
Budgeting helps you do just that. By allotting a certain amount to spend, you can guarantee that there’s still more left over and you’re not hanging by a thread by your next paycheck.
- Have a budget that you know how you spend. Whether or not you’re an impulse shopper or thrifty spender, your budget will help you refocus where your money SHOULD be going. Your budget will reveal those areas where you’re spending too much money on – accessories, clothes, books, and shoes – and will help you refocus where you ought to spend it on more important goals. Sticking to a realistic budget lets your money “breathe,” leaving you with money to spare. If, for example, you allot a certain amount for your weekly expenses – which includes transportation, food, utilities, etc – and you don’t get to match up, you’ll find that those were where the money’s supposed to go falls into “potholes” of unnecessary expense. This way, you can use the cash on things that matter, rather than stressing out on purchases you’ve probably forgotten already. Pinpoint these and you’ll have fewer things to think about at night.
- Don’t break promises to your self. If you decide to give yourself a working budget, STICK TO IT. Make sure you make something that you’re able to stick to though. If you’re on a personal budget, make room for little “side trips”, only because you also need to feel that the money you have is yours. But don’t allot too much, these things are supposed to help you SAVE not spend. Remember, your budget is the guide that tells you where your finances are headed or where you it to go. A budget lets you “ride” your money: steering it where you want to go and not having it steer you.
- Set up financial goals, and MONITOR your progress. Where do you want to be financially in five to ten years? Do you want to own certain things that cost money? Set goals that you can work to achieve. Take note that these dreams may be feasible, but if you don’t watch where you’re going, or record your expenses, you may not be aware of the status of your finances. By the time that you do, you might be swimming too far out in the wrong direction, and we wouldn’t want that. Record your progress and give yourself small pats on the back if you reach certain milestones. Normally people get a high whenever they achieve a certain goal, so let this be a motivation for you to further work up the financial ladder.
- Live simpler. Your budget will work wonders for you if you start utilizing it now. But if you take care and practice living below your income line, you’ll see that there’s an even bigger opportunity to free up cash. Cutting back and saving up does not mean living poorly, or living on scraps. Living below your means only means making sure that the money you spend is not money that will haunt you before your next paycheck arrives. Resist that last minute temptation to rush through the mall-wide sale, or even as simply as packing a lunch instead of eating out.
Know these and your budget will let you handle your money without suffocating yourself out of your financial comfort zone.