Learning How to Live on a Budget
When most people think about living on a budget, they think they will never get to have fun again. This is simply not true. Living on a budget is about using your money only on things that are important to you, and cutting down on useless spending. By using this strategy you can create a budget that does not cramp your lifestyle, while still meeting your financial goals.
The first step in creating a budget is seeing where your money goes now. It is important to track every dollar spent for at least a month. Spending $1.50 on a drink every day costs you $45 a month, which is a significant amount of money. Once you have an idea of where your money goes you can rank each item in order of importance– maybe you really enjoy that daily drink and the money is worth it to you. Try and cut out items that you can easily live without and put that money towards things like debt reduction or savings that will help you in the long run.
Once you have your budget set, be sure to review it once or twice a year to make sure it is working out the way you want it to. This is also a good time to adjust for life changes. Maybe your job is paying you more or less, or gas prices have effected your spending. A budget that is not reflective of your current situation is just as bad as not having one at all.
It is also important to budget for annual expenses like Christmas or vacation. Set an amount you can save monthly towards these items and stick to that budget. If you can’t keep yourself from spending that money, the prevalence of online bank accounts means that you can open an online savings account and have money transferred automatically every month with just a few minutes of your time.
Find a financial goal that you can strive for and head for it. Maybe it is eliminating your credit card debt, or paying off your car early. Achieving these goals can both help you stay on track, as well as making large jumps forward in your financial situation. Take a few days to revel in your accomplishment, and then buckle down and put that extra money towards achieving your next goal.
As with any life change, there will probably be times when you fail to meet your goals. This is not a failure, it is an opportunity to re-evaluate your budget and see if there is something you need to change. Think about your finances like losing weight. Most people have an overabundance of spending without any financial backing to hold them together. It’s a lot like eating cake all the time. Focusing on what’s important financially is like eating a healthy diet rich in fruits and vegetables. If you do that, you will have plenty of chances to enjoy your cake without ruining your financial health.
While sticking to your budget will be difficult at first, the end result will be worth it. You will be surprised what you can achieve if you can stay focused on your goals. Hopefully this article has inspired to get budgeting.