Budgeting is necessary for everyone and you can make it easier with these tips and tricks.
If you already budget, check how many of these tips you’re already using. If you’re only just starting to budget, take these tricks onboard to get off on the right foot.
1. Use an app
Are you excited to pull out receipts, scribble figures into tables and assess your spending? Nope, didn’t think so.
Thanks to technology, you don’t need to anymore. There are heaps of great apps available for free, and they can automate the hard parts. With an app, all you have to do is put in your expenses of the day and the app will handle the rest. At the end of the month, it will have everything in one place for you to review.
2. Keep your receipts
Ask for receipts and hang on to them. They’re useful as evidence for insurance purposes and claiming tax deductions or refunds, but can also help you manage your budget. They might show if you’re overspending when using a credit card, are consistently paying too much for something or if one location tends to bring out the big spender in you.
3. Work the bank
Budgeting is all about saving, and saving is all about finding a system that works for you. In essence, as long as you’re putting money in the bank at the end of each month you’re making a positive difference and can look for ways to put away more than the month before. Everyone’s financial situation is different, but banks will almost always have to be part of your budgeting system, so you might as well make sure you choose the optimal one. Consider a high interest savings account that might let you put more away. It may be a small difference, but the sooner it starts the sooner it can grow. To make sure it’s a good switch, double check with a savings calculator before you sign anything.
4. Review your spending
Did you know you can save money by spending less? Did you know that you can save money by not having a cup of coffee every day? These unhelpful tips are brought to you by many experts, most of whom are apparently not coffee drinkers.
The truth is that having a budget doesn’t mean you need to cut out “bad” spending. Instead, you should simply budget for it. Set yourself a daily, weekly or monthly allowance for certain expenses and then stick to it. You can set a budget to suit your habits, but you can also let your habits shift to suit your budget. You don’t have to cut these expenses from your routine when you can adjust them instead.
5. Get a budgeting buddy
If you’re fighting a war against your own spending habits, call in some backup. Budgeting is easier with a support system. It could be a partner, friend, family member, financial coach or almost anyone else in the same boat as you. They can help keep you on track if you find yourself backsliding or overspending, so don’t underestimate the power of moral support. And don’t underestimate how much you can learn from each other either. Share useful tricks that worked for you and they might do the same. Support groups like Debtors Anonymous mean almost anyone can find an understanding crowd to help them change their habits.
6. Use cash
Keep spending simple with cold hard cash. No credit, no fees and no way to spend more than you have. Set aside a certain amount of money each week and withdraw enough cash to see you through, with whatever kind of discretionary spending buffer, if any, you think is right. Save your credit cards for emergencies and don’t buy it until you can pay for it in cash to automatically change your own spending habits.
7. Leverage micro-investments
Micro-investments can simultaneously let you make investments and more easily balance the budget. The premise is simple: whenever you buy something, round it up to the nearest dollar and invest the excess. This adds up over time, letting you continually invest even if you’re living on a tight budget. For example, round up a coffee that costs $2.60 and deposit the extra 40 cents. Do this every day and over the course of a year you’ve invested $146 with relatively little effort. This can all be done near-automatically with groups like Raiz Invest (previously Acorns Australia), or with any one of a number of other options. Build micro-investments into your schedule to invest on a budget.
8. Pay yourself
Paying yourself might seem like a surprising way to save money, but a good budget can allow for it. Instead of drawing from your living expenses account for luxuries, consider setting up a special account for these. Many banks will let you segment and set up your accounts as desired. Pay 10% (or however much you can) of your typical income into this special fund every time you get paid, and use only this account for non-budgeted expenses. Consider keeping up with a separate savings account as well and combining the two to pay for big expenses like holidays.
9. Set achievable goals
Have you ever met someone who made a new year’s resolution to get fit, then when you next saw them they were smoking a pack a day and having ice cream for breakfast? The same thing can happen with budgeting, which is a lot like dieting in two main ways.
- You need to set realistic goals. Don’t plan on halving your body weight in a week, and don’t plan on cutting your budget by 80% unless you actually think it’s possible. The money has to come from somewhere.
- You need to stick with it. A lot of people diet until they lose weight, then quit the diet and immediately balloon right back to their former size. Likewise, a lot of people budget carefully until they’re out of debt and then figure they can go right back to their old ways. If circumstances change, adjust your budget rather than throwing it out.
10. Adjust your goals if you don’t meet them
If you managed to perfectly nail your budget down to the last cent on your first try then neither this guide, nor this world, was meant for you. If you didn’t, you’re just like everyone else. Some of the things that end up in your budget might simply be unfeasible or inaccurate. You may have misquoted how much you spent, set an unattainable budget or forgotten to consider important expenses. Don’t panic – it’s okay to make amendments. This is not cheating, and is in fact a normal part of keeping a budget. Your spending needs and financial situation will naturally evolve and your budget needs to keep up. Making amendments is a learning opportunity, and a chance to look at your expenses in a different light.
Don’t think of your budget as a necessary evil or a chore, but instead as a powerful ally in the fight for savings. If you haven’t already created a budget and aren’t doing anything else at the moment, start now.