One of the biggest reasons budgets fail is people experience difficulty adhering to them. In most cases, this is usually because people make their budgets too draconian in their zeal to reach their financial goals as quickly as possible.
Crafting a budget within which you can live improves your potential for success tremendously. It also makes watching your money grow more fun. Yes, you’re required to forego frivolous spending and purchases, but if you choose carefully, you’ll find you won’t miss those money drains at all.
Here’s what you need to do.
1. Understand Your “Why”
Any change requires effort. If it didn’t, everyone would be successful at each new venture they tried. Now, with that said, there are things you can do to make changes easier to accomplish. One of the most important things is having a clear understanding of why you’re doing it in the first place.
Whatever your undertaking, a compelling why will keep you motivated if it gets tough. When it comes to budgeting, a compelling why will help you resist those gorgeous new shoes, those flashy new wheels for your car, or that insanely expensive restaurant to which all of your friends are going after work.
Make a list of the things you want to accomplish with your budget and keep it where you can see it. Review it monthly when you pay your bills. That way, whenever you’re tempted to break your budget, you’ll see why you shouldn’t.
2. Include Mad Money
A lot of experts advocate following the 50:30:20 rule of budgeting. This strategy dictates allocating 50 percent of your income for needs, 30 percent for savings and 20 percent for wants.
This, of course, gives rise to the necessity of differentiating needs from wants. In this context, needs include housing, utilities, healthcare, transportation, insurance, basic groceries and clothing. Meanwhile, entertainment, expensive haircuts, pet supplies, recreational travel, exotic food and luxurious clothing fall under the category of wants.
All too often, people will feel they need to cut wants completely to create a realistic budget. However, as counter-intuitive as it sounds, doing so will actually sink your budgeting effort. Now, with that said, you should make sure you have your needs met before focusing too heavily on your wants.
In some cases, you might have to move some cash around to do so. If you have a lot of obligations, companies like Freedom Debt Relief can help you rework your debt load so you can accomplish this worthy goal.
3. Spend More Efficiently
While it might sound like the same thing, there is a difference between cutting your spending and spending more efficiently. With the latter, you’re looking for opportunities to get more from the expenditures you’re already making.
For example, if you’re going to Whole Foods to do your grocery shopping, you can find reasonable substitutes at Grocery Outlet for far less money. You’re still getting everything you need, while paying less for it.
This is a more efficient use of your money.
Similarly, if you’re spending more than $50 each month on cable, consider doing away with it in favor of streaming services such as Netflix, Amazon Prime and the like. You’ll still have far more programming than you’ll ever be able to watch, for far less cash. Plus, if you buy your own modem and router, you’ll eliminate the monthly rental charges on those items as well.
These tips are essential to crafting a budget within which you can live. Understanding why you’re budgeting, leaving yourself room for enjoyment and being smarter about the way you acquire things will find you happily saving money each month.
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