Track Every Penny
First, the most important thing you’ll need for a good budget, is an accurate view of your finances. Estimates about how much you earn and how much you spend won’t get you anywhere. If you want to take control of your relationship with money, sit down with your bank statements from the last few months and make a list of how much your essential expenses cost, as well as how much you spend on luxury items. You should also have a system in place for tracking your spending as you continue with your budget. Mobile banking apps can often help with this, as they allow you to track every last penny. The more visibility you have into your spending, the less likely you are to make mistakes. Don’t let forgetting about small costs like buying a coffee on the way to work damage your budgeting habits.
Find the Easy Wins First
Another reason people tend to struggle with budgeting is they assume that reducing their expenses means giving up all the things they enjoy. While it’s true you may need to compromise to achieve some of your financial goals, you can also save yourself a lot of heartache by looking for simple wins. For instance, if you’re currently spending a fortune on your existing student loans, consolidating, and refinancing those loans with a private lender can help you to save money on your monthly expenses. The best thing about a student loan refinance, is you’re not actively removing anything from your day-to-day spending habits. You’re just freeing up cash that would have been going towards interest.
Finally, though it is important to be strict with your budget, you need to be able to stick to it, and this doesn’t mean restricting yourself to a spending strategy which simply doesn’t work. If you find that you’re spending more than you expected each month, or something in your life changes, then you need to be willing to go back and change your budget accordingly. A budget isn’t set in stone, it’s something that can flex and change according to your goals and lifestyle. The more you update and adjust your budget based on what you learn about your spending habits, the more likely you are to stick to a strategy that really works for you. Every time there’s a change in your life, like a new expense you need to think about, or you a pay raise at work, return to your budget and re-evaluate your spending.