When you make a budget, remember it should help you reach your financial goals. But it’s also important to take into account things that may change from month to month, like bills or expenses that vary, as well as one-time purchases. Revisit your real estate home warranty to be sure you have the right plan you can afford which provides you with peace of mind on costly repairs.
Tracking your spending and making adjustments may seem like work, but it’s worth it to reach your savings goal! Try these budgeting tips to help you stay on track:
1. Set a Weekly Budget
It’s easier to manage your finances on a weekly basis than it is monthly. After all, things can go awry in a hurry, from eating out too much to buying those cute shoes that you “just had to have.”
Start by listing out your fixed expenses (like the rent or mortgage, utilities) and your spending money for the week. If you aren’t sure what to include, take a look at your past bank statements for some educated guesses. Taking this approach to budgeting will also help you stay on top of the bills you have committed to pay each month. It will prevent you from accidentally skipping payments or falling behind on paying your debts.
2. Set a Monthly Budget
If you haven’t already, create a budget and start tracking your spending. This will give you a good idea of your financial habits and help you make changes to get you on the path toward a more successful future.
Determine your income sources and expenses by analyzing your bank statements, pay stubs and credit card records. Include your fixed expenses, like housing and utilities, as well as your debt and savings payments.
Next, identify your variable expenses, such as food and entertainment. You may want to estimate these costs based on past experiences. Then, allocate a percentage of your total monthly take-home pay to each budget category.
3. Track Your Spending
Tracking your spending is a vital step toward making good financial choices. Start by recording all of your expenses for at least a week (a month is better). You can use any method you want, but it’s important to record the data consistently.
Pinpoint your money habits by analyzing all of your expenses and bills. This will help you understand where your money is going and identify areas where you may be overspending.
Once you’ve analyzed your expenses, set goals to cut back on your spending. This might include shopping with a list, switching to cash or cutting out unnecessary entertainment expenses. Setting specific, measurable, attainable, realistic and timely (SMART) goals can make it easier to stick to your budget.
4. Set a Savings Goal
If you want to make saving money a priority, it’s important to set specific targets or goals. Rather than just “saving more,” pick something specific that you want to accomplish, such as a vacation or a down payment on a home. This will help keep your motivation high and ensure that you don’t veer off course.
It’s also helpful to determine when you want to reach each goal, as this will help you prioritize and create a timeline. For example, you may decide that you need to save for a new car first and then prioritize a vacation after that. Setting SMART goals can also help you achieve your savings goals.
5. Set a Goal to Pay Off Debt
Sometimes budgets can get a little muddy when you dip into other categories to pay for something you want or to keep up with debt payments. To avoid this, earmark about 20% of your take-home pay toward savings or debt repayment and make sure to reevaluate your budget every few months.
Remember, just because you have a budget doesn’t mean that you can’t have fun. Just be responsible and always put your debts and savings before anything you want or need to spend money on. If you need to, cut back on discretionary spending until you can afford those things without using credit cards.
6. Set a Goal to Save Money
Whether you’re working to pay off debt or build your savings, it’s essential to set a specific goal for what you want to accomplish. It might be as simple as eating at home instead of going out for lunch everyday or as complicated as setting aside 10 percent of each paycheck.
Once you have your goals, it’s important to create a timeline for reaching those milestones. For example, if you’re saving for a new car or home remodel, decide how long it will take to save enough money to make those purchases. Keeping track of your spending by using a budgeting app or spreadsheet can help you stay on target with your goals.