One of the primary components of personal finance is creating a budget. A budget gives you power over your money by enabling you to direct it where you want it to go and to decide how much you spend and save.
The difficulty doesn’t lie so much in planning a budget as in sticking to it. Humans have a way of being reactive and impulsive, leading us to become our own worst enemies when it comes to spending. But have no fear; you are not alone. This article will go over five easy ways you can increase the odds of sticking to your budget.
1. Use Cash. Cash is a powerful tool that will help you stick to your budget because once it’s gone, it’s gone. For example, if your budget allocates $50 for gas, when you go to the gas station take only $20 and leave the remainder at home or in your bank account. This not only limits what you spend on your budgeted item at one time, but limits the temptation to look around and spend on impulse.
Ways to increase your use of cash:
- Use cash envelopes for each budget item
- Use a sinking fund
- Keep funds in a savings account
Each of these methods can help you allocate cash appropriately while ensuring you stick with your budget. As the old phrase goes, cash is king.
2. Find an Accountability Partner. Not everyone is passionate about personal finance and that’s fine. But if you’re not, pairing up with someone who is can be an effective approach because they can ensure you stick with your budget. Your accountability partner could be your spouse, a friend, or someone in an organization you belong to.
Accountability partner benefits:
- Accountability in your spending
- A resource to ask questions
- Increased motivation
3. Automate. Automation is an underused budgeting tool. Automate as much as possible. It not only ensures your bills are paid on time, but allocates your money to those expenses before you have a chance to spend it on something else.
In addition to bill payments, you can automate saving by having a small portion of every paycheque deposited into a savings account. This allocates the money to savings before you have a chance to spend it without thinking. The more you automate the simpler and more painless it becomes.
4. Use Technology. Financial technology has made budgeting – and sticking to a budget – much easier. There are apps that track your spending, automate savings, and move money according to your spending habits. Similar to the automation process, using technology can remove the human element from budgeting, making it an effective way to stick with the budget.
Apps that can help you stick to a budget and save:
- Moya Mobile
- M1 Finance
5. Set Clear Goals. Go beyond the simple act of budgeting. Creating a budget for the sake of doing so is fine, but there should be a purpose behind it. For example, if you want to save for a wedding or purchase a home, formalizing that goal will give you an incentive to stick with your budget.
Personal finance is a never-ending journey that evolves with time. But no matter the evolution process you will always need a budget. To help you stick with that budget, ensure you use cash as much as possible, find an accountability partner, automate savings and payments, take advantage of technology, and be sure you have clear goals. These tricks will certainly help you stick with and maintain your budget.