10 Budgeting Tips
Here are 10 simple budgeting tips that are easy to use and implement.
- Create a new budget for each month.
You may have expenses in a month that won’t carry over to the next month. You may have budgeted for car maintenance or vacation that won’t necessarily carry over to the new month. It is important to revisit these expenses every month to decide if they still deserve a place in your budget.
- Set a realistic budget.
Over ambitious goals can derail your budget. Be realistic with your budget. Setting a budget you can’t achieve can be discouraging. Setting realistic goals can help you achieve those important milestones such as paying off debt or taking a dream vacation.
- Separate your expenses into ‘needs’ and ‘wants’.
This will help you get a clear picture of your fixed expenses and non-essential expenses. There are some expenses such as mortgage/rent, utilities, car payments, insurance that are ‘needs’ or fixed and there is not much you can do to cut back on these expenses. There are some expenses that are ‘wants’ that you can cut back on if needed. Always budget your fixed expenses and then determine how much room you have for your ‘wants’.
- Remember to budget for surprises.
Set aside a certain amount to budget for unexpected expenses for the month. If you have budgeted every single dollar for specific activities then you are not going to have any flexibility for any surprise expenses. It is always good practice to build a buffer. If you don’t use it then you can carry it over to the next month.
- Pay off debt.
Paying off debt should be a priority. Debt creates a burden on your income and gets in the way of you doing more with your income. Each month you incur interest on your debt and that interest takes a bite out of your income every month.
- Always budget savings.
When budgeting we focus on expenses and can end up allocating all our income on expenses. It is important to remember that we also need to budget for saving. Each month after budgeting for fixed expenses, allocate some amount for savings. It doesn’t have to be much but allocate as much as you can to savings.
- Use budgeting tools.
There are a lot of budgeting tools that can be great for budgeting. They can help you build and keep track of your budget. These tools can help organize your expenses in categories so you can easily see your spending trends. Budgeting mobile apps can also help keep track of your receipts. You can take a photo of your receipt and save it to a budgeting app. There are many other features that can help you budget.
- Zero-based budgeting.
Every month start your budget from zero. Don’t copy your previous month’s budget. You have worked hard for your income. Make expenses show their worth to be on your budget. Zero-based budgeting requires each expense to be justified. It may seem like a lot of work to do this every month but it will become easier with practice.
- Budget as a family.
A lot of things we spend money on impacts us as a family. Let’s take streaming services as an example, you may have streaming services, such as Netflix, Prime Video, Apple TV+, Disney Plus, Crave, or any other services. You need to sit down as a family and discuss if you need all these streaming services, it may be that you are only using a few and hardly use the others but you keep paying for them every month. You can’t make that determination all by yourself, include your family in budgeting and together create a robust budget.
- Revisit your budget.
Budgets are not set and forget. You should always revisit your budget regularly. You may realize that something you budgeted for at the beginning of the month no longer needs to be included. It may be that there is an overspend in one category which means you will have cut back on some other expense. Assessing your budget regularly can help you make more accurate budgets.
Using these simple budgeting tips are a great way to starting and staying on top of budgets. Remember these budgeting tips are only going to show results if you are committed to taking control of your finances.