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It’s common knowledge that budgeting is important because it helps us spend wisely. Although we know this all too well, few of us make the effort of making one. It becomes more of a chore than a necessity.
Procrastination is usually one of the many reasons why most people are yet to draw a budget and stick to it. There are those who keep budgets but don’t really get it right.
Thanks to technology, we don’t have to sweat it. There are a couple of digital tools like Acorns and mint that can crunch the numbers for us and get the hard part done. All you need is to motivate yourself to save and grow your money.
The effects of spending money without a budget are evident. Debts that aren’t paid on time or sorted out at all, and the worst; no hope for a bright future.
You’ve probably put off preparing a budget for far too long. Now’s the right time to put your plan into practice. If you’ve got no clue about budgeting, here are some pointers on how to make budgeting come out naturally:
1. Figure Out What You’ve Got at the Moment
You’ve got to know how much you have so you can budget for it. Go through every place that you save your money, be it in credit cards or your savings account.
Doing this also helps to keep track of your money and find out where it’s going. The longer you follow your cash, the better. Keeping track for some time helps you have a trend that you can work with.
There are several options you can use when keeping track of your cash. You could use a budgeting app or do it the old-fashioned way, using a notebook to keep records.
Here are some efficient money-tracking apps that you can use to track your money:
It might be a bit down on simplicity, but this app is perfect for budgeting. With a snapshot feature that shows you what you’ve got left of your budget, it helps keep you from spending more. It’s a great choice because it supports almost every currency, is free and has Android and iPhone versions.
Looking for a convenient app with a simple interface? Look no further than Mint. Signing up to it is free, and it updates all your details so you’re always in the know. It also alerts you every time there’s an upcoming bill and puts your money and bills in a single place.
This simple app offers no learning curve or charts, making it a favourite among many. It’s got cool features such as one-tap editing and adding, you can add it on any device and you can use it at your own pace.
Prism has a unique feature that keeps it a step ahead of other apps. It allows users to see their account balances and bills on one platform. Bills can also be paid directly from the app or scheduled for payment later.
2. Have a Look at your Income and Spending
How much are you spending in a month? Chances are you’re spending more than what you earn. That’s why budgeting is necessary. Take some time to compare your spending versus your income, to know where most of your cash goes.
Once you’ve identified it, you can make the necessary adjustments. You could plan for the extra cash you spend or include it in your savings.
There are a couple of reasons why reviewing your spending is essential. First, it helps you achieve your dreams.
If, for instance, you plan on saving for a car, reviewing enables you to find out areas that you need to cut back on. By doing that, you make this possible.
Second, you bring everything to light. From crucial spending to impulse ones, you’re aware of how you spend your cash. Even if you’ve got a stable source of income, you could be working without enjoying the fruits of your labour.
With reviewing, you can put extra effort to fight spending habits that waste your cash. It’s never too late to get started.
Third, it keeps your bank account safe. The main idea of reviewing is to keep everything in control. Spending much more can lead to you spending more than what you’ve saved. The result? Overdraft fees. Be aware of your expenses to avoid paying these fees.
Fourth, you’re able to prioritize your needs. If, while reviewing, you notice that you’ve been wasting cash, you can take the right turn. Choose to spend the money on more profitable items.
3. Spot your Financial Goals and Needs
Different people have a different definition of ‘needs.’ To some, they’re stuff like a new phone or TV. To others, it’s all about the basics; food, clothing and shelter.
When budgeting, it’s always important to prioritize on things that you need. Pick those that you can’t do without.
You could also include transport cash if you don’t own a car yet. Don’t forget the bills and responsibilities that need your attention. An example is a payment for utilities.
Once that’s over with, focus on your financial goals. Are you planning to have sufficient insurance, invest in an Emergency fund or want to live a frugal life?
Whatever your goal is, it’s essential to have enough cash to finance it. Even if it means living on the essentials only at the moment.
You might have heard of financial goals but don’t see the point of having some. They’re not just some list with technical details. They’re more important than you can imagine. Here are some reasons why you need to have the goals:
They Help You Identify Your Short and Long-Term Goals
To grow financially, you need to have goals. Financial goals help you come up with short-term and long-term goals. You also make a plan to meet them, no matter what they might be.
They Help You In Securing Your Future
Goals like planning for retirement help you to have the cash for the future. This is important as the future is unknown to us.
They enable you to live a stress-free life
Think of the daily challenges you face. Without a plan, they can get worse. Thanks to financial goals, you can have plans. These plans enable you to eliminate these financial hiccups such as debts, one by one.
4. Use Mobile Banking Apps
If you’re among those who live a busy life and don’t have time to draw a budget, guess what? You don’t have to. With the development of technology, you can do just about anything. Including budgeting for your cash, digitally.
Introducing mobile banking apps- the answer to your problem. Most of them have the power to help you make the right decisions when it comes to your finances. You only need to know how to use them.
Here are some mobile banking apps that are worth trying out:
A product of AxiomBank, this stylish app has all you need to manage your finances. It’s got a cute visual that’s easy to work with. It also has an impressive tool, My $ Manager, that allows you to monitor the progress of your target goals.
It’s totally convenient and allows you to transfer money to and from other banks. What’s more, you can open an account fast and get access to Allpoint ATMs around the world.
This app offers free access to its users but there’s a catch. You have to have a Redstone online account to gain access to it. It’s got an attractive interface that gives you a quick peek at investment accounts. You can also view loan and deposit accounts easily.
ECU uses a clear-cut approach to paying bills. It also simplifies budgeting and other financial tasks you might want to be done. It allows you to handle all these tasks with just a tap. You have to enrol in ECU Online Banking to enjoy its services.
WPCU is all about simplicity and convenience. It offers maximum security to its users and it also allows users to set transaction and balance alerts among other things in a simple way. It also makes finance management easier with its clean interface.
5. Embrace the Automatic Approach
Saving money can be quite hard at times, especially if you’re a natural spendthrift. Choosing to do things manually may not do the trick.
Most times, the temptation becomes too strong. And you end up spending money that you should have saved in the first place.
Don’t beat yourself up. Apart from deciding to replace that money, there’s a more efficient way of saving your money.
If you’ve got a bank account, find out if the bank allows you to come up with an electronic money transfer. If not, it’s about time that you saved in a bank that offers this service.
You can choose to increase your savings by opening accounts in more than one bank. As long as you’re financially able to sustain them, it’s possible.
Electronic money transfer is reliable. It transfers a certain amount of money from one of your accounts to your savings account.
The cool thing is you can set it to transfer cash whenever you want, as well as how much cash you want to be transferred. And, you won’t have to fret about transfer fees. To be safe, it’s advisable to activate it as soon as you get your paycheck.
If you don’t know how to set it up, you can always ask for assistance at the bank. Or, do some research online.
This prevents you from caving when the urge to overspend comes knocking. If you don’t have a bank or savings account, it’s straightforward to open them. Plus, they’re highly efficient as well.
6. Have an Emergency Fund for Future Emergencies
It’s common for people to make a budget that only focuses on the now. Though it’s a good start, a budget that can be of benefit to you even in the near future is better. That’s why a strong budget needs to include an emergency fund.
You never know when you’ll fall sick, or if the savings you allocated for food will dry up before the set date arrives. Instead of troubling your bank account, reach into your emergency fund and get the money you need. Remember to replace it as soon as you can.
The mistake that most people make is that they open emergency funds for all the wrong reasons. They want to have a convenient place to get cash any time they need it. You need to be clear about what needs to qualify for some money from the emergency fund.
If it’s anything along the line of new shoes or buying a quick snack, it wouldn’t be wise to take from it. This helps the emergency fund to grow.
When starting an emergency fund, don’t worry about how much you have in hand. If you’ve got a job, you could set aside a certain amount to go to your account every time you get your salary. If you don’t have a job, set aside whichever amount you can manage and put it into your account.
According to experts, there’s a minimum amount of cash that an emergency fund should have. Before you can take savings from it, it has to have at least $1000.
There is no restriction on the total number of emergency funds you can have. But, if you can handle one, it will still make all the difference.
7. Stick with your Budget to the Very End
Making a budget may be the simple part. The hard part, however, is sticking to it. There’s always the temptation to stray away from it, especially if you’re not used to the idea.
To make it stick into your mind, try printing more than one copy and put them in various places. That’s just one of the ways to help you remember. You might not always have the budget with you anyway.
You might try this and still end up going against your budget. Try the ‘cash envelopes’ technique.
In this method, you put various amounts of money into different large envelopes, based on the use, and mark them. Not only is it useful, but it has some perks too. Here are some of the benefits:
It Helps You Get Your Spending Habits in Line
You’ll never manage your finances if you can’t control your spending urges. The cash envelope method keeps you in line. With money hidden in the envelope, the desire to spend eventually disappears.
It’s Way Better Than Plastic Money
With credit cards, it’s easier to overspend. The envelope system limits this by making money inaccessible to you. This helps you stick to your budget.
Spending is Controlled
Once you’ve enclosed your money in the budget and sealed it, you’ve kept that money safe. You can only use it for its intended purpose. Not having a budget causes you to spend without thinking twice. The envelope system prompts you to think twice before you can spend.
You always Pay Your Bills and Other Expenses on Time
Budgeting for money and putting it in your wallet can be tricky. Once you get the chance, chances of restraining yourself are rare. With the envelope system, you’re guaranteed of paying bills on time since the money is safe.
8. Say No and Stick to Your Guns
When you decide to be on a budget, it means that you’ll have to mind your spending. It will involve being very specific. Anything that you haven’t included automatically gets a shake of the head from you.
If you went out with your buddies before and splurged money, you’ll have to say no to that. A night out at the movies? No thanks. You’re on a budget. Getting a treat at your favorite junk food joint? That should be the last thing on your mind.
Should you fall into the trap, get up, dust yourself and go on. It’s never easy sticking to a budget, but with a resolute mind, you’ll get the hang of it.
Any time you feel that temptations are getting the better of you, remind yourself your goal. Picture yourself achieving your set goal in your mind. And, look at budgeting from a positive perspective; you’ve got your spending in control.
Alternatively, you could avoid being idle when you’re off work. Instead of going out for lunch, prepare something at home and eat it instead. Do whatever it takes to stick to your budget, even when it means staying away from your friends.
Instead of wasting cash on movies, make online flicks your option. Even if you’re shopping using a credit card, while you’re on a budget, you may want to quit it. You’ll have to do this until you’re used to the budgeting concept.
There are many ways that you can entertain yourself. You can reward yourself without spending even a dollar from your budget.
9. Treat Yourself Once In a While
Being on a budget is hard work. If you’ve been in one for a while successfully, or you started one recently and have stuck to it, that’s a plausible achievement. You need to set aside some cash to treat yourself for a job well done.
When choosing to start a budget, it’s important to ask yourself why you’re starting the budget. And what attitude you’re starting it with. If you have a negative outlook, you won’t enjoy the experience. Learn to go easy on yourself and appreciate yourself.
You may be hesitant about this. I mean, why start a budget, and when you’re in the process of adjusting to it, spend some money on yourself? The answer is quite simple. Treating yourself gives you the motivation to keep it up. And to aim for a higher target next time.
When you’re too stingy, even on yourself, it’s easy to slip back into the overspending habit. Set aside some ‘fun cash’ for yourself depending on your budget.
Even if it’s not much, the big thing is for you to do something out of the ordinary and love it. Get yourself a watch, buy yourself a new pair of shoes. Or, treat yourself to lunch at your favourite restaurant.
If you’re having a hard time deciding, how about setting 5% of your total savings aside for your reward money? The rest of the 95% can go to your savings and other expenses.
Remember to treat yourself responsibly. Even if you deserve it, don’t forget about your budget.
10. Include the Not-so-frequent Expenses
The first things that you’re likely to include are food, gas, power bills, cable costs and water bills. But, how about those needs that rarely pop up?
Examples are membership fees and health insurance. Putting them into your budget is essential. They need your attention too. Instead of including them regularly, you can choose to add them once a month.
It helps save you in case they come when you least expect it. If you’ve got two or more jobs, you can include them more than once in your budget.
Budgeting is Fun if You Make Fun
Having a negative mentality about budgeting makes you avoid it. It can’t serve its purpose effectively until you make an effort to start one with the right attitude.
You’ve got all the resources you need and can choose from them. There’s so much money that goes to waste on unnecessary things, without you noticing it at most times. If you’ve been putting it off, there’s now no excuse to keep on any longer.
Once you start a budget, you’ll realize that you should have started one way sooner.
Maybe you prefer a notebook approach or prefer going the digital way, whichever the case, these points will help you have fun while budgeting effectively.
As I’ve mentioned in this post severally, budgeting isn’t easy and isn’t for the faint-hearted. What I can tell you with all confidence is that you won’t regret starting one. With the right steps and determination, you can have more money than what you’re budgeting for.
Even if you’ll make mistakes along the way, there’s no need to be hard on yourself. You probably miscalculated costs or slipped back into your extravagant ways and that’s why it didn’t work out. There’s always room for improvement and it’s never too late to improve your financial status.