While sticking to a defined budget is an important part of managing your finances, it can be difficult to stay on-track in everyday life. These tips should help you make everyday choices so staying on budget is as easy as possible.
Be Aware of Your Income
An important part of budgeting is being aware of how much money you actually have to spend. Making a list of the incomes of every earning member of the family is an important way to start this progress.
Incomes can vary from month to month, especially if you or a member of your household do seasonal work or are self-employed, so make sure to take this into account. The best way to do this is to slightly underestimate the total income, giving yourself a safety margin when it comes to spending.
While this step can seem obvious it is important to know where you stand so you can make realistic targets in your budgeting.
Be Aware of Your Outgoings
The other side of budgeting is the act of spending your money. To work out how much you’re spending, make sure to save your receipts. Once you’ve done this, matching up how much you spend with how much you make should be easier, especially if the whole household is saving and checking their receipts.
Saving receipts isn’t the only way to track spending, if you’re organised enough, plotting each purchase or expenditure into a spreadsheet can be an effective way of tracking your budget.
Again, while being aware of your outgoing spending seems obvious, the amount you spend on some parts of your life might surprise you. This is especially helpful when working out where to make cuts in your budget later.
Make Savings a Priority
Once you have worked out your income and your outgoings, allocate some of your income to savings, whether this involves reducing your outgoings or putting aside surplus income. Doing this will build up a fund that you can call on in an emergency, put towards paying off debts or use for whatever goal you are budgeting towards.
This should be done before you allocate spending to other parts of your life, making saving your priority is an important part of achieving your budgeting goals, whatever they might be. As well as helping you to move towards your goals, knowing how much you have saved can give you a sense of achievement which is important when budgeting feels draining or frustrating.
When going through your income and outgoings, a good thing to do can be identifying your necessities. Utility bills, rent, council tax, and other compulsory expenditures are obviously a large part of this category, but this can also include making sure you have toiletries and basic food items.
After identifying these necessities, set aside an amount for them, slightly overestimating the cost to give yourself a safety margin when it comes to these expenses.
Plan Meals and Shop Ahead of Time
Impulse-buying food during the week is tempting, especially when you don’t know what you’re going to eat when you get home. A way to get around this is to write yourself a weekly menu, planning out the ingredients needed for each meal.
Making sure you pick up most of these ingredients in a single weekly shop means you have fewer reasons to return to the supermarket later in the week, giving you less of an opportunity for impulse-buying.
Having a menu before you go shopping also means that if an ingredient appears several times in your menu you can make sure to buy more of it, often saving money when compared to buying several smaller portions. While this is a good way to save money on some items, be careful of perishables like fruit and vegetables, as they can go off if purchased too far in advance.
Eliminate Expensive Luxuries
Cutting out one or two items from your purchases can make a massive difference to your overall expenses, especially if they’re highly taxed items like cigarettes or alcohol. These don’t have to be the items you lose, however, making decisions about how much you want to spend on different entertainment items like TV packages or visiting the cinema can help as well.
Going out for meals is often an expensive part of people’s lives, and can be cut out by increasing the amount of homecooked meals you have each week. While this takes up valuable time, it saves money, and can be used as a way to bring the household together, using cooking as a communal activity.
Allowing yourself meals out or other luxury items as occasional treats can also be a good idea, as constantly limiting spending can feel draining and build up stress.
Give Yourself Limits
Setting a weekly allowance is an excellent way to make sure you don’t break your budget. It might seem like an unnecessary restriction but dividing your monthly budget into weekly chunks makes it much easier to keep track of.
While this might feel like you’re punishing yourself for spending, it’s really a way to take control of your habits and make sure you stick to your budget. This might mean that you have more packed lunches instead of eating out during the week to stay within your allowance, or something similar, but these sacrifices are an important part of following a budget plan.
Set Yourself Goals
Whether your goal is to save for a specific large purchase, pay off debts, or simply to put some money away in savings, knowing how close you are to achieving your goal helps to keep you on track with your budget. This means that you have to have a set goal, something that you have to achieve for your budget to be successful
To make sure you know your goals and how far you are on your way towards them, it is important to create milestones for yourself and the rest of the household, whether that’s simply in the form of a note written on the calendar or something bigger like a celebratory meal for achieving a savings goal. These are helpful to both mark your progress and stop budgeting becoming too much of a mental drain.