Do you follow a monthly budget?
For many, the idea of budgeting and saving seems like a daunting task. But, with the right strategies in place, anyone can easily take control of their money which is why we’ve come up with the ultimate budgeting cheat sheet below.
1. Define Your Goals
Before forming a budget, take the time to think of any short or long term financial goals you have. This could be anything from paying off debt, to saving for a vacation, buying a new home or having money set aside in an emergency fund. Regardless of what it is you want to achieve, knowing exactly what it is that you’ll be working towards will motivate you to save and stick to a plan throughout the year.
2. Track Expenses and Income
For any budget to be successful, you must be aware of how much you’re bringing in and spending in a given month. Otherwise, you won’t know how much you could be putting away or if there are any areas you could be cutting back on.
3. Don’t Be Over Ambitious
Many people get discouraged by saving because they feel like they are not doing enough. To prevent feeling burnt out by your budget, be sure to create a realistic one that reflects your current financial situation and does not leave you strapped for cash. A standard rule to follow for creating a realistic budget is the 50/30/20 method: meaning, 50% of your income should be dedicated to your needs, 30% to your wants, and 20% to savings and debt repayment.
4. Automate Tasks
Never miss a savings deposit by setting up automatic transfers from your checking account to your savings. Automatic deposits eliminate the need to think about how much money you’ll be moving over, and setting time aside to do it, which often results in delayed or forgotten transfers.
In addition to automating deposits, there are also plenty of free tools and software programs designed to automatically track your money for you. These programs can intuitively sort your transactions for you as a way to provide a visual of your financial progress. They can even help motivate you by sending automatic reminders or alerts if your plan is falling behind.
5. Prioritize Debt Repayment
You will never be able to save if you’re constantly in debt. So, if you are carrying a balance on a credit card or owe money towards a loan, it is in your best interest to prioritize paying it off above anything else. This could be done with the ‘avalanche method’ where you tackle the high-interest debt first or with the ‘snowball method’ which seeks to target the smallest debts before moving onto the bigger ones. Regardless, focusing on debt repayment means you won’t be incurring more interest or wasting more time ignoring it.
7. Set Savings Challenges
To motivate yourself to stick to a budgeting plan, consider setting small challenges that you can meet along the way. This can be done with things like a ‘no money Monday’ where you try to avoid spending anything on Mondays. Or consider setting yourself a more structured year-long goal where you have to set a specific dollar amount aside each week.
These smaller goals will encourage you on your savings journey and prevent you from giving up before you reach your goals.
Ultimately, budgeting is a great tool that can jump-start your dreams, so consider speaking with us at 407-328-5001 for a customized financial plan that can help you reach yours.
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