How many people really do budget?
Did you know that according to a recent study done by U.S. bank, 41% of Americans say they are using a budget to keep track of their finances? This means that the majority of Americans, and I would guess the vast majority of people around the world have no structured system in place to keep their finances in order. This could be because people never tried, or because they have, and decided it wasn’t worth it and they didn’t stay committed. I’m sure you know many people who have decided to do something, were very excited about it for a few weeks, and then you never heard about it again. The exact same thing happens to people with budgeting. They decide they will start budgeting, they prepare a budget, and they never follow through long enough to see any real effects. Today, I’m going to be giving you guys 5 tips on how to stick to your budget to make sure this doesn’t happen to you.
5 Tips on Sticking to a Budget
1. Stay realistic. The first tip seems simple, but it’s a very common mistake. Many people are so excited when they start their personal finance journey that they cut out some of the things that they in reality aren’t able to. For example, a person who often goes out with their friends on weekends for some drinks. They decide that because they’ve started saving, they won’t go out anymore, so they budget $100 a month for it. In 2 weeks or so, they overspend during their first month of budgeting, they get demotivated, and they never look at their budget again. This is such a common mistake that is committed by so many people. If you know something is a very important part of your life, budget some more money for it, and cut back something else which isn’t important. Your budget has to be well thought through if you ever want to have a chance at sticking to it.
2. Include some money for unexpected expenses every month. Including money for unexpected expenses will ensure that when they happen, it won’t demotivate you from sticking to your budget and you won’t feel like you’re overspending. In addition, if you don’t end up needing it, you can just contribute it to your emergency fund, savings account, investments or wherever else you think is a good place to put it.
3. Instead of going out, invite your friends over. Inviting your friends for dinner or some drinks at your place has many benefits. First of all, you might feel pressured to clean up your apartment for when they come, so you get the added benefit of a clean apartment. Secondly, you will end up spending less money, ask them if they can bring some food or a bottle of wine and you’ll have more than enough food and drinks for a fun night. Also, nights at home are much more personal, you can only find this out when you try it, but I promise you you will know what I’m talking about once you do. Lastly, your friends will often also be relieved to not have to go out and spend a bunch of money. I discovered this only when I started inviting people over, and the next time we planned to go out, they proposed the idea of going to someone’s place instead.
4. Make sure to often check your financial goals and how close you are to them. This is a proven strategy that will keep you motivated. Seeing those goals and getting closer to hitting them every month will give you such a wonderful feeling that is hard to explain, and once you build up the momentum, it will become a form of addiction. This means that as well as being fully aware of your financial situation, you’ll also be more motivated to keep going. If you want to read a little bit more on financial goals you can do it in my free eBook on the Start here page.
5. Have a grocery list. Sticking to a grocery list that fits your budget plan is a great way not to overspend. Having a grocery list means you don’t have to track your expenses everytime you go to the store because you already know how much money is necessary for those groceries. It can also help you lead a healthier lifestyle if you ensure to have a grocery list that consists of mostly healthy foods.
Keep this in mind
As a closing remark, I’d like to tell you this. Most of you probably work hard for your money, and spend a lot of time working. Whenever you get the urge to buy something that you know isn’t necessary, just go home, give it a day or two, and think about whether you really need that and how many hours or days of your work it costs. This method is sure to keep you from making some unnecessary purchases. Happy Monday and have an awesome week everyone!