Here are four tips that can help you stick to your budget:
1. Don’t Make it So Complicated
A lot of people think they need to create an ultra-detailed budget that breaks down how much money they’re spending on binders versus blankets versus beer.
You don’t need to get into that much detail. It’s okay to maintain a generalized budget that breaks down your spending into broad categories, such as housing, transportation, savings, and everything else.
In fact, if you want to take this to its extreme, you could even create abudget that has only two categories: Savings and everything else. That way you’ll at least be sure that you’re saving enough.
2. Guessing at Your Costs
When you first create a budget, review your past six months of spending to see how much you’re currently spending on given items.
This will help you create a budget that’s realistic.
If you’re currently spending $400 per month on groceries, it’s unrealistic to think that you’re going to slash that budget down to only $100 a month. Look back over how you’ve been spending and create a budget that’s 5% to 10% less than your current habits. As time goes by, decrease it slowly.
3. Track Your Expenses
There are many ways you can review how much you spend. You can literally stuff money in physical envelopes and carry these to various places, such as the grocery store and the gas station.
You can also link all of your accounts to free online software, such as Mint.com, in order to track your spending. Regardless of the method you use, make sure that you’re looking at your spending.
4. Focusing Only on Regular Expenses
Plenty of people create a budget that reflects their ongoing costs, such as cable, Internet, groceries and gas. However, they forget about one-time annual costs like holiday travel, birthday gifts, and any additional taxes that they need to pay in April.
They also forget quarterly expenses such as trips to the salon or veterinary appointments. When you create a budget, think of all your annual expenses and divide these by 12. You’ll know how much you’re spending any given month, even if you don’t literally spend that money every single month.