If you fail to plan, you are planning to fail.
The number one rule of money management is to spend less than you make. I will repeat it for the people in the back… spend less than you make.
The only way that you will be able to keep track of how much you are making vs how much you are spending is by creating a budget.
Having a budget is foundational when it comes to money management and should always be first on your money management to-do list. I cannot overstress the importance of a budget. Keep reading for tips on how to create a budget that works.
A monthly budget will not only show you where your money is going, but you will also be better able to see where you can make cuts and save money. Even if you only have $500 to your name right now, you can still budget and plan out where every single dollar will go.
Whether you are working with $500 or $5000, living by a budget will be tough the first few months but it is like a muscle. The more you use that muscle, the stronger you will be, and the easier it will be over time.
NOTE- Having a budget does not mean that you are always going to be able to meet your monthly goals, but it certainly helps. There will always be outside forces and unexpected challenges but having a budget will allow you to reflect on them and ask yourself what (if any) thing you can do to mitigate the effect of these.
Here are some tried and true tips to help you stick to your budget:
1. Understand that your budget is a work in progress.
The number one reason that people stop budgeting is that they do not meet their budget the first time they tried.
Do not go for perfection- The goal is not to be perfect but to learn to keep track of your spending in hopes that you can learn over time to get closer to the budget.
2. Plan your budget before the start of every month.
Do not simply copy and paste your budget from the previous month into the next. For instance, if you know every September you spend more money on say school supplies, keep that in mind and allocate money to use for those expenses that month.
I have also heard of people planning for the month when the month has already started. While it is better to plan late rather than never, it will certainly be easier for you if you can plan ahead of time.
3. You need to check in on your budget daily, weekly and monthly
Checking in often is valuable because it keeps money on top of your mind. When you do this, it makes it easier for you to meet your goals.
4. Reflect on your spending habits and look for areas for improvement
There are a ton of budgeting apps and tools out right now. What works for one person may not necessarily work for another. If you have tried one tool, do not give up. Instead, try something else until you find what works for you.
Do you have any tips on budgeting?
Leave a comment and let me know