While creating a budget is the easy part, the reason that most budgets fail is during the execution phase. Either controlling spending went completely out the window or month over month the needed adjustments weren’t made to keep a realistic hold on the finances. Not only spending, but leaving for savings & retirement is just as important. By making a few tweaks, along with dedication and patience, you can be one of the few that carries out a successful budget and will be able to see more money coming in than going out each month, and finally getting ahead compared to the norm of living paycheck to paycheck.
Track Spending
You may have an idea how much you’re spending every month, but until you actually look at the statement and go line by line, it could be quite eye opening. Not only do you have your normal expenses such as the mortgage, car lease, and utilities that are pretty fixed, it’s the spending on food, gas, and entertainment will need a close eye. Just for fun, or to depress you, add up all of the items throughout the month that could have been avoided and see what that total is.
Use Cash Instead of Credit
I know the concept of cash is quickly fading by the year, with “cash is king” no longer needed and in favor of swiping a card for every purchase, it can be easy to get into a mound of debt with virtually no stop to using a card. At least if you set aside a certain amount in cash you can spend each month, maybe a little more thought can go into each purchase, because once it’s gone it’s gone. With a card you can continue to spend, until you panic when you look at the statement the following month.
Build Up an Emergency Fund
You never know when a one-time large purchase will hit you such as an appliance or auto repair, not to mention a vet bill, so it’s best to be prepared so that you can use available cash instead of putting on a credit card that will add extra monthly payments until the balance is gone. This may not build up overnight, but if you can eventually get to having a few months’ worth of reserves in an account, you could be in pretty good shape for a financial cushion if you ever do need it.
Avoid Going Out to Eat
The food budget is a necessary piece, but spending each meal out can quickly add up, no matter the convenience of having someone else cook and clean up. By thinking ahead with a little food prep, you can make a list of items that will last for breakfast, lunch, dinner, snacks, and even setting up having your coffee brew at home as you’re about to walk out of the door in the morning, is a great way to save hundreds of dollars every month. It may be difficult to cut out entirely, but try at least limiting to once a week and watch the immediate lift to your finances.