Many people wonder how to stick to a budget, and indeed, many of the inquiries that Hornet Partners get from would-be clients pertain to this. In theory, budgeting itself is pretty simple: Take in more than you spend. However, this isn’t the reality for most people, which is why their budgets eventually run away from them.
If you find yourself in this predicament, then maybe you just need a mental reset. Often, the difference between sticking to a budget or not comes down to a matter of know-how.
People who have been given concrete steps toward this goal do better than those who haven’t been. If you count yourself among those who’d like to know more about how to stick to a budget, then these three tips are for you.
1. Know How Much You Spend
Money.com suggests that would-be budgeters take a look at their finances before they commit to a budget. It’s not that the site’s experts don’t believe budgeting is important. It is. However, it’s difficult to stick to a budget if you don’t know how much you spend in the first place.
Many people spend more than they believe they do. It isn’t until they start keeping a money diary that they see how much they spend each month.
If you’re not keeping a money journal, then you should consider it. It’ll show you where your money is going. Plan on carrying around a little notebook/ journal. Record each purchase in this book.
Be sure to add credit card and debit expenses as well. Very often, these purchases are the big budget drainers, because we don’t think about the money we spend. We don’t see the money that we’re spending, so it’s easier to just forget the expense.
2. Cold Turkey is Difficult for Most Budgeters
Sure, you have the best intentions of cutting out all of those trips to Starbucks, those dinners out with friends, those monthly magazine subscriptions. However, Every Dollar cautions budgeters against such extremes.
Instead the money site suggests that would-be budgeters just cut back – at least initially – on these extra expenses. For example, if you stop at the local coffee place every day for a latte, then cut that down to one or two trips a week.
That said, you also need to take steps to replace the habit. For example, let’s say that your daily coffee habit is killing your budget. You need to find a way to replace your daily trips to the local coffee house.
To do so, you can invest in a carry-along thermos so that you can still bring coffee with you on the road. You might even invest in a home cappuccino maker. Yes, you’ll spend more initially, but in the long run, you’ll save money.
Eventually, you can strive to completely cut out your daily coffee purchase if you feel that your budget needs it, but first you must address the habit if you want lasting budgeting success.
3. Try the 50/30/20 Budgeting Technique
Many people who get overwhelmed by their budgets have never really learned how to allocate their money. That’s where the 50/30/20 budget can help.
This budget breakdown suggests that people allocate their budgets this way:
- 50% of your budget goes toward your essentials, like rent, utilities, food, etc.
- 30% goes toward your wants, like concert tickets, the latest novel by your favorite author, or that morning latte.
- 20% goes toward your savings
Depending upon your debt situation, you may have to tweak this a bit. Some of
your money may need to go toward paying off your debt.
However, once you’re used to budgeting like this, it’ll be easier to maintain a
budget in the future because you have some idea of how you should allocate your
money.
Final Thoughts on Sticking to a Budget
Learning how to stick to a budget is a must if you want to get control of your
finances. Although there are many ways to motivate yourself to stick to a
budget, the three suggestions on this list are among the most popular that
money advisors recommend.
First, you want to figure out how much you spend each month. It’s impossible to
motivate yourself to stick to a budget if you don’t know where your money is
going. Second, it’s good to replace a bad habit with a good habit. Your brain
needs something to do with the “open space” that your budget cutbacks have
caused.
Finally, you need to find a budgeting plan you can stick to, like the 50/30/20
budget. Granted, if you are deeply in debt, it may be that you need to put some
of the 30% of your “fun money” toward your debt as well.
If you’re not sure how much it should be, you could always ask a representative
at Hornet Partners. They have practical suggestions that can help most people
gain control of their budgets.