For almost as long as currency has existed, people have struggled with creating and sticking to a budget. Things are even more complicated in the modern age, where spending your hard-earned money is easier than ever before. But why exactly is it so hard to track your spending? What about creating a budget is so difficult to stick with? The truth is less complicated than you might believe.
See, the problem with most people that set out to create a budget for themselves is that they are completely unrealistic. They tend to try and create a hyper-slim, cut-out-all-the-fun budget that looks incredible on paper. Jim Tehan, a spokesman for the Myvesta Foundation, a self-help consumer education website, says the problem lies in the people, not the money: “People write out budgets all the time without knowing where their money is really going,” he says. “What they’ve created is a wish list of how they’d like to spend their money, but it’s not realistic. It’s a page of lies.”
Let’s look at a few ways to help you create a budget and stick to it, while still living your life.
Track Your Spending Accurately
“Once you know where your money is going, you can make an educated decision about how best to allocate your money,” Tehan says. “The number 1 rule of setting budgets is not to cut all the fun out of your life. Inevitably, Spartan budgets that have no allowance for entertainment are doomed to failure. If you’re eating out every night, and that’s something you enjoy doing, try eating out once a week instead,” he says. “It’s not about cutting out everything that gives you joy in life. It’s about better allocating your money.
Have A Clear Set Of Priorities
Once you have set your budget around your essential expenses, such us your rent, car payment, utilities and food, you can begin to prioritize your remaining income as you see fit. The key thing to remember here is that you can’t have everything. The sooner you set (and commit to) clear priorities, the sooner your budget will be in line with your lifestyle, allowing it a continued spot in your life.
Switch To Cash Only
How easy is it nowadays to spend thousands of dollars? Why, as simple as typing in a sequence of numbers on our computers, that’s how. This new method of payment takes the edge off of parting with your funds, and as such, it is extremely dangerous. Credit card debt runs rampant in the US, and for good reason. When you switch to an all-cash plan (or as close to it as you can get), every penny that you spend becomes a physical, strenuous act.
Automate Your Savings Flow
When it comes to manually saving money, most of us have the best of intentions. However, as usual, life tends to find ways to derail these plans, making us lose sight of our financial goals along the way. To help prevent this, try setting up a portion of your paycheck to be directly deposited into your savings account each and every payday. This allows you to get used to the idea and rhythm of saving. “If you put that money aside before you even see it, you won’t miss it. Direct deposit helps to put your savings on autopilot.” Tehan adds.
Whenever you begin to save in earnest, it can become quite an addictive process. The best part about saving is that it doesn’t have to mean the end of your social life. Everything in life is a balance, and finding that balance in your financial life will lead to years of happiness, stability, and peace of mind. So what are you waiting for?
Get out there and start saving!