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We all know it is easier to create a budget than stick to your budget, so we are going to share with you some tips for keeping your budget.
Just knowing you are going to need to fess up to someone when you spent money on an unnecessary item not already in your budget goes a long way to “keeping you honest” with your budget. If you are on your own, the accountability partner is a must for everyone who is not incredibly self-disciplined.
If you are part of a couple, you may be able to hold one-another accountable…but you might not. If both of you are “free spirits,” you may find you are a lot more successful if you meet with someone that can hold your feet to the fire and keep you honest.
Knowing ahead of time that some months your budget won’t work as planned means you don’t have to throw it out at the first sign of trouble. Why beat yourself up? You know it is going to happen. No matter what happened in the past, keeping going, because, like the tortoise in the tortoise and the hare story, it is slow and steady that wins the day.
We admit that things will go wrong. You will get weak and go over budget. You will forget a bill. Something bad will happen that causes you to spend more money than you planned.
The trick is, keep working the budget even if you have a bad month. The longer you practice at trying to keep your budget, the more successful you will be. You had a bad month, so what? We all have bad months. You are a champion, so get over it and move on! If you can keep your budget 10 out of 12 months, you will be more successful than 60% of Americans (because only about 40% of Americans try to keep a budget).
So, go get ‘em tiger. We know if you keep working that budget, you will win at budgeting.
With bills that don’t change every month, try to have an automatic deduction and (key point), record those deductions ahead of time on payday, not when they come out. The trick is ensuring you never forget about a bill and that you allocate the money as soon as possible.
Great items to setup on automatic withdrawals include your mortgage or rent payment, cable bill, phone bill, and utility bills on “budget billing.” It’s surprising how many things you can actually setup nowadays on monthly withdrawals because even many investment firms and charitable causes can set you up on monthly withdrawals as well!
Keeping your checking account balance lower by writing in those withdrawals also helps you with your mindset so you don’t think “yeah, I have the money” when that money was supposed to go to a bill in a week or two. So, for every paycheck, plan which bills will be zapped out of the checking account and write them down in your checkbook.
Using cash for things like groceries does two things for you. First, people spend considerably less at stores when they pay cash than when they pay using a credit card. That makes buying with cash worthwhile right there.
The second benefit is that it is easier to keep within budget when you use cash versus when you use a credit card. The problem with keeping within budget with credit card purchases is what you spent is out-of-site, out-of-mind. Most people don’t do a great job writing down and keeping a running tally of their credit card purchases. With cash, you don’t have to keep a running tally, you just take out the cash you need every month or every paycheck. When you want to know how much is left in the budget, just like in your cash envelope.
We like the envelope system for our cash budget items. Using “the envelope system” is as easy as writing your budget item name on the envelope, and sticking cash in the envelope when you make your withdrawals. It makes keeping to your budget super easy.
Even if you pay your credit cards off every month, they make it very easy to make purchases that put you over budget. Yes, they are convenient. Yes, you get cash back, but if you are getting 2% cash back, overspending your budget by 10%, and paying 20% APR if you can’t pay it all off, did you really save money? If you are slow on math, the answer is “no.”
The same holds true for other credit deals. Those “6 months same as cash” deals are great…for the few people who actually pay in 6 months, but most people don’t and now you spent a ton more money for the furniture that seemed like a great deal at the time. Every time you use debt to pay, you just don’t think about the spend the same way as if you saw $20 bills leaving your hand.
The monthly review helps you make minor course adjustments as you go, and helps you see your progress. When you review your budget, an important component is to also track how well you are doing at paying down debt and saving up money. You won’t feel great about sticking to your budget unless you see keeping a budget is worth it. Seeing your debt go down and your savings go up gives you a scorecard showing how you are doing from month to month.
There are plenty of resources to give you more help with budgeting and personal finance. Here are some links to folks that can give you extra help.
Next Step is an organization that helps folks get setup for success to buy a new home, and a component of their work is helping you create and keep a budget. We recommend Next Step and send folks to them when they need help getting their finances in order.
Financial Peace University and Crown Financial help you with budgeting and the mindset needed for success from an explicitly Christian perspective. Yes, everyone can get something from these programs, but we know not everyone wants that perspective. We just mention them because of their popularity, and there are large amounts of people who found success through these programs. We hope you enjoyed our three-part series on budgeting. Make sure you send us a message on Facebook if you have any questions.
Drop us a message and we'll get back to you with some answers!