How to Set a Budget that Actually Sticks
by Elizabeth S.
Life is unpredictable and full of unforeseen circumstances. You have to be careful while spending your money so that you will be able to stay afloat in tough situations.
Setting a budget goes a long way in helping you utilize your funds efficiently, but the problem most people run into is actually sticking to that budget. Consider the following tips for making a budget that works wonders, while also rewarding you for staying with it:
11 Tips for Sticking to Your Budget
- The first step is calculating your income and expenses. Calculate your net pay, supplementary income (i.e. rent), and income from smaller side jobs. Then deduct all expenses such as grocery bills, fee payments, insurance premiums, and medical bills. Some payments are fixed per month, but others may vary. Don’t worry, minor adjustments can always be made.
- Keep one thing in mind: you, as a human, need to socialize. Set aside some portion of your budget for recreation. How much you set aside will depend on your income and other commitments. You shouldn’t overcommit to savings at the expense of your mental health. Go to a movie or enjoy a short weekend trip with your friends.
- What happens if you incur unexpected costs? Your car might break down or a family member may fall ill. Your monthly budget should make room for this. Set aside a reasonable amount every month for these occasional costs so that you won’t have to scramble for money when you have to pay for them. Stick to the budget that makes your life comfortable.
- Make a savings account and add to it regularly! This is the most important part of your budget. You have to save a part of your earnings for your children’s education, for family vacations, and of course, for your retirement! You will have regrets later on if you don't contribute to your savings while you are earning well. Save as much as you can so that you won’t need to rely on big loans in the future. Have clear goals so that you will be motivated to save money. Make it easier on yourself by automating your savings transfers. This will make sure that you don't deviate from the planned budget.
- Your budget should be practical. Don’t make it look great on paper, but difficult to stick to. Budgeting requires some skill, and if you cannot stick to it, the purpose of budgeting is not served.
- Review your budget on a consistent basis. You cannot stick to one budget all your life because your priorities will undoubtedly change. You may change jobs, need to pay for your children’s education, or make a large but necessary purchase. You will have to sit down and make suitable adjustments so that your budget works for you.
- Opt for a system that you can easily understand. It may be software, a diary, or a simple excel spreadsheet. There are also popular budgeting apps for your smartphone that can help.
- Divide your earnings into different accounts and make the payments electronically. It’s difficult to save money if it is physically with you burning a hole in your pocket.
- Have a clear vision. Your vision should look at both short-term and long-term decisions. When you look at the big picture, you should evaluate yourself and identify where you are heading.
- Sometimes you cannot stick to your budget. It is fine if you deviate occasionally, but if you do it often, you defeat the purpose of budgeting.
- Treat your budget as your friend that guides you on how to spend your hard-earned money, rather than a punishment. This will motivate you to stick to it.
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