If you’ve read my first article on budgeting you know this is my go to finance tool in helping keep my spending in check. I can’t stress enough how important having and sticking to a budget is! But did you know it takes at least 3 or 4 months for the average person to actually start sticking to their budget? Trust me you will go over your budget for a month or two, that’s okay. The goal isn’t to see who can follow instructions the first time around but who has the willpower to get back up and see it through. Here are 8 months of budgeting that will ensure you reach your goal.
1 The first month track your spending habits
I don’t recommend starting a budget out of the blue. In order to truly gauge how much you spend and what you spend on, you will need for the first month at least to track your spending habits. This means every time you spend at least $1 write down what you spent it on. At the end of the month group your expenses into categories. This will give you the most realistic picture of how much you are spending.
2 The second month write down how much you want to spend in each category
Now that you know how much of your paycheck you are spending (if all of it) and what you are spending it on. It’s time to give yourself a limit on how much you want to spend on everything. Go through every category and see what the maximum you are willing to spend is. This step is where you start to visualize your savings, and actions you can take to make it happen.
3 The third month use the Paper Envelope Method
If you can put down how much money you have allotted yourself for everything in separate envelopes. Whenever you are spending only use the money out of the envelope and nothing else. Once the envelope is empty don’t spend anything more. This is a mind trick to how quickly you are spending, if that is the case. We have gotten so use to swiping our debit/credit cards that I think we sometimes forget how quickly things add up. When you can visually see your money dwindling you start being less hasty with how you spend at least I know I do.
4 The fourth month add a new category, Savings!!!!
Pay yourself first. Since you are still starting off new to budgeting I recommend having a different savings goal every month until you get comfortable with using a budget and have your spending habits down to a science. Start off small and plan to save $100. Again you are marking your envelopes and only spending what’s inside and no more when it gone. If you have anything left in the envelopes at the end of the month take it and put it into the savings envelope. See if you can increase your savings in a month or two by $50.
5 The fifth month see what category or expense items in a category you can eliminate all together
At least just for a little while. See if you can, not spend on new clothes, stop eating out so much or turn down an invitation for entertainment every once in a while. Instead find alternatives to the things you are already using. Look into preparing your lunch instead of going out to eat or using coupons, find free activities in your area (I know for my city every first Friday of the month they have tons of vendors in downtown that give away free food, activities for the kids and live music)
6 The sixth month use your resources
What I mean by this is take advantage of a free budgeting app to help keep track if you aren’t already. There are plenty of free tools online to help with your budget. Read articles over ways people have used to save. There may be ideas that you hadn’t thought of. Listen to webinars/seminars and plus join a group where you can share your goals with others. It’s always been my experience that things are a little easier when you have a support group. (The mint app is free, it helps you track your expenses, lets you sync your bank account to track in real time your purchases and even gives you a free report of your credit score https://www.mint.com/).
7 The seventh month challenge yourself
If you’ve been sticking to the plan so far you are feeling pretty good about yourself. See if you can find a savings challenge online or start one among friends and family. Challenge yourself to save even more or eliminate a bill altogether. My sister when she first moved into her apartment that wasn’t furnished decided to rent a living room suite. After I helped her start budgeting her 7th month challenge was to get rid of her furniture she was renting and she bought some used furniture it saved her over $500 that year.
8 The eight month is visualizing your dream
You know I’m all about visualizing the end goal. This month create an album of all the things you want out of your budget and put it in a book or put pictures on the wall. Just something to remind you why you are working so hard in case you forget. My album is filled with pictures of wedding stuff and houses since my next goal is saving up for my dream wedding, then on to purchasing my first home.
If you’ve gotten this far congratulations! For most people the hardest part is just admitting that they need help with their personal finances. I know for myself I thought I knew all there was to know about budgets and my spending habits since I have my undergrad in Accounting and my MBA. Well that notion quickly flew out of the window once I graduated and what I call my “real world” bills started to pile up. I told myself I didn’t want to spend 10 years of my life paying off student loans or on car notes. I could be using that time and money to save for my future. Now here I am almost 4 years later and I only have 1 more year until I am done paying off my debts.
Well you’ve read my ways I used to save I would love to hear some of your ideas.