The first step to getting your financial life together is to create a budget.
Many people have no idea where their money is going. How can you reach your financial goals if you have no clue what you’re spending your money on?
A budget is “telling your money where to go instead of wondering where it went.” A budget puts YOU back in the driver’s seat and gives you control over your finances. Some people think budgets are restricting, but the opposite is actually true.
A budget gives you freedom by allowing you to reach your goals AND to spend money on fun stuff. You no longer need to feel guilty when you spend money – as long as it’s in the budget, you’re good!
Maybe you already have a budget, but you still keep overspending each month. Uh-oh! A budget only works if you stick to it. Here are five essential tips for sticking to your budget!
*Disclosure: This post contains affiliate links. Read our full disclosure policy here.
Check In Regularly
It’s REALLY easy to overspend if you aren’t monitoring your spending closely. If you’re a money nerd, you might want to compile a spreadsheet of all of your purchases.
For those of us who don’t want to take the time to do that, there’s an easy solution with online banking. Login to your account often to check your balance and review your purchases.
It’s also a good idea to do this in case there’s ever any suspicious or fraudulent activity on your account. The sooner you find out about it, the better!
Use Cash Envelopes
Dave Ramsey recommends the cash envelope system. With credit cards, we don’t really “feel” money anymore. We get a bill the following month and in the meantime, we feel like we have a lot more money than we actually do.
With cash, we can see it being taken from us immediately, so we “feel” it when we make a purchase.
With the cash envelope system, you put cash into several different envelopes. You might have one for “groceries”, another marked “eating out/entertainment”, and a third labeled “haircuts”, for example.
Once an envelope is empty, you’re no longer allowed to spend cash on that category (until the next month).The cash envelope system works well because it’s very easy to keep track of how much you’ve spent and how much money you have left.
Identify Your Budget Busters
Even frugal people often have one or two areas where they tend to overspend. Mine is groceries, and my husband’s are Starbucks and eating out. Identify your budget busters and come up with ways to beat them.
For example, if your problem is eating out, you could set a goal to get lunch at work once per week instead of every day. If groceries are your budget buster (a common one), try:
- Switching to a cheaper store (like Wal-mart).
- Cutting back on prepackaged items and microwaveable foods.
- Freezing leftovers.
- Using the free Ibotta app to earn cash back on groceries. Download Ibotta with my link and you’ll receive a free $10 welcome bonus once you start redeeming offers!
Remember Your Goals and Spend Mindfully
Why did you set a budget in the first place? Were you tired of living paycheck to paycheck and always feeling broke? Do you want to pay off debt, save for a down payment on a home, or buy a new car?
Remember why you started. It might be tempting to go on a mini shopping spree or hit Starbucks daily, but reaching your goals is more important!
When you decide to buy something, give yourself some time to think it over. Make sure to ask yourself a few key questions:
- If I didn’t buy this, what could I do with the money instead?
- Could I buy something similar for a cheaper price somewhere else?
- How many hours would it take to earn the money to pay for this?
- Will I still want this a week from now? A month? A year?
It’s tough to stick to a budget if your friends or family members are always pressuring you to go out and spend money. Explain to them that you’re on a budget. If they truly care about you, they should understand.
You don’t need to avoid them in order to save money. There are plenty of fun things that can be done for free or a low cost.
Instead of going to an expensive dinner or hitting the bars, suggest something frugal instead. You could try having a board game night, going hiking, playing mini golf, taking your dogs to the park, or checking out a free festival.
Stick to Your Budget
Overspending is a common struggle that many people face. Even the most frugal people often have one or two “problem areas” where they tend to overspend.
If you’re having trouble sticking to your budget, make sure to:
- Monitor your spending regularly.
- Use the cash envelope system.
- Identify your budget busters.
- Remember why you started budgeting.
- Spend mindfully.
- Ignore temptation.
Need some more help with budgeting?
This budgeting bundle walks you through how to set up a budget and includes six helpful spreadsheets including a Monthly Budgeting Worksheet and a Cash Envelope Tracker.
For less than the cost of two cups of coffee, you can get all of the tools you need to get your financial life together!
Are you ready to get started? Download the bundle today!