We all know that keeping track of your daily budget is not always the most appealing thing to do, if we were to be honest it can be the most tiresome thing to do throughout your daily life. Spending money and making purchases of the things we love and want is of course makes us more happy than looking at what’s in our bank account and keeping a check on it. The simple fact of the matter is that however tedious budgeting can be, we really need to introduce it in one form or another. It can be as simple as keeping a mental note that you are spending more than you should one week and perhaps be more mindful the next or keeping track of what expenses are coming up and having the funds available so you don’t go into debt. If you are new to budgeting, let’s go over some budgeting tips to get you started.
1. Use Cash Instead of Card
Ever wondered why your parents are better at budgeting than you? It’s simply because cash was the main source to any transaction. As the years went by, technology as well as Covid-19 has expedited a cashless society. More a more are using tap and pay, buy now and pay later as well has debit and credit cards. Ever seen cafés that are totally cashless, it seems to be the direction but that doesn’t mean that you have to be cashless. If it makes it easier to track how much you are spending each week, then carry cash and go for it. Withdraw cash for the week and don’t use anything other than cash for purchases, if you keep at this, you will quickly learn lifelong budgeting skills.
2. Separate Spending and Give Yourself a Budget
Work out your monthly expenses for groceries, utilities, car expenses and fun. All of these combined should give you a total budget for the month, don’t make it exactly to the dollar, it’s always best to over budget and give yourself some breathing space. The aim here is to keep within the budget you have allocated for each key group of expenses.
3. Record Your Budget and Have a Logbook
One of the more exciting areas of budgeting is to see all the date you are keeping track of, it’s never too late to start budgeting and once you keep at it, you will begin to build a wealth of information over time that will be beneficial to you in the future. Whether it be written in a logbook or recorded on an spreadsheet, you can easily see where you can improve and where additional savings can be made.
4. Consider Upcoming Events into Your Budget
Have a budget and sticking to it is great but what if there are 3 birthdays and a wedding in the month of December? Having to find extra funds for birthday presents, a new dress and Christmas presents in a short period of time can quickly tempt you to put it on credit card for a quick fix. Instead, keep your calendar handy and budget in advance for these occasions, simply saving an extra $25 a week over the course of the year can prevent financial difficulty in these circumstances.
5. Work on an Emergency Fund
Building an emergency fund allows you to have money set aside in case something unexpected happens. By working on an emergency fund you will always have a backup when something unexpected occurs. It allows you to pay for mechanical repairs when your car breaks down, medical emergencies when accidents occur or saves you from getting into debt when you lost your job. Having that extra level of security with an emergency fund can prevent something unforeseen turn into a disaster, so plan for a fund to cover your expenses for a minimum of at least 3 months.
It’s important to understand that budgeting helps you become financial fit, just like exercising helps you become physically and mentally fit. Results do not come overnight but if you keep working on it and keep improving, you will eventually become more knowledgeable, more wiser and reach your financial goals.