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10 Simple Budgeting Tips That Can Transform Your Life

Written by prositesfinancialAug 14 • 4 minute read

10 budget tips

Living paycheck to paycheck can be frustrating and leave you spinning your financial wheels and not making any progress. Following these simple budgeting tips can renovate your spending habits and help you complete goals that are important to you.

1. Create a Zero-Based Budget

A zero-based budget accounts for every dollar of each paycheck. Often we have a budget that accounts for some mandatory expenses but then leaves the remaining money on the table for anyone to grab for whatever they want. The problem with this approach is that you end up spending money flippantly, and often it goes to things you wouldn’t have preferred to spend it on.

For example, it is easy to go out and spend a little here and a little there at the mall, and before you know it, you’ve just spent $200. When you have every dollar designated, this type of spending is less likely to happen. Also, that money could go a long way toward achieving something on your goal list.

2. Create Your Budget Together as a Family

If you have a spouse or family member who shares your finances, you both must be on the same page with regards to money. If one of you establishes the budget and the other is out of the loop, then they will be pulling against you and spending money outside the budget. Worse yet, this will almost inevitably lead to arguments about money you could prevent by open communication.

3. Remember, No Two Months are Exactly the Same

During the school year months, you might need to budget for school expenses, while during the summer, you might need to plan for vacations or family trips. It’s ok to have different budgets for each month that meet your changing financial needs. The point of a budget is to create structure and accountability for each dollar, not to have your expenses be precisely the same each month. Don’t be afraid to modify your budget to suit the demands of the month.

4. Begin with Your Most Important Categories

These categories might not be what you’d expect. Saving and giving are recommended as the first two categories because they matter the most to your family and your community in the long run. Next come major living expenses like your rent or mortgage, car payment or repairs, services, and utilities. You want to create a budget that represents the things you value first and foremost and also covers core needs like shelter, food, and transportation.

5. Eliminate Your Debts

Regardless of your financial goals, debts will get in the way until you pay them off. Credit card and loan balances require monthly payments and interest charges, which will eat into your budget and make it harder to stick to the plan. By eliminating your debts one at a time, you can free up money that was going to repay lenders and reach your own goals more quickly.

6. Be Flexible

When you set up your budget each month, don’t think that you need to have the same amount in each category as you did in the past months. It is essential to be realistic, but you also need to make deliberate cuts to areas where you have been historically overspending. If you have a daily coffee shop stop that has been racking up hundreds of dollars a month, perhaps it’s time to reduce that coffee budget by making it at home instead. Similar principles apply in other categories.

7. Eliminate Credit Card Use

For anyone who is living on a budget or trying to reduce debt and reach financial goals, credit cards are a trap. They entice you to spend money you don’t have on things you don’t need, or even on things you do need but can’t afford. They accumulate debt that you don’t see, which can quickly get out of control.

Credit cards are not your friend. The rewards they sometimes promise result from companies knowing they will make far more in interest and fees. If you are serious about creating good financial habits, one of the best things you can do is to stop spending on your credit cards, even if it means cutting them up or freezing them inside a block of ice!

8. Try a Budgeting App or Website

Free smartphone apps like EveryDollar can help you create a budget and stick to it. They make it easy to track financial transactions and see what your budget looks like in real time. Some (including the premium version of EveryDollar) allows you to integrate your bank account to update the app automatically when you spend money.

Watching your expenses tracked in real time and the effect they have on your budget can be a real motivator and help you stay on track. Another benefit of these apps is that your family members can access them, which means you can all stay on the same page regarding your budget.

9. Set Realistic, Targeted Goals

Whether your goal is to pay off a credit card balance, save for college, or pay off your mortgage, try to set small incremental goals and focus all your financial energy on reaching one at a time. If you attempt to achieve everything at once, you may get overwhelmed and give up. Furthermore, spreading all your available money across several goals at once means you will only make a tiny amount of progress on each one each month. However, if you focus all your available resources on a singular goal at a time, you will make progress much faster.

10. Stop Comparing Yourself to Others

Comparing yourself to others has never been more pervasive than it is today. The always-connected world of social media not only means we compare ourselves with others but that those comparisons come in non-stop by the thousands. Furthermore, those people we tend to compare ourselves to on social media are often posting sponsored or artificially curated versions of their lives, showing only the very best highlights and making it appear as though these are the everyday norm.

We can also compare ourselves to people in different countries, with wildly different incomes and very different living costs. This judgment leads to dangerously inaccurate expectations that can cause depression, anxiety, and a feeling of reduced self-worth. Remember how bad it was when people were just keeping up with the Jones’s? Now we try to keep up with everyone on the planet!

The key is to stop all those comparisons and to start a daily gratitude practice. Give thanks each day and make a list of things you appreciate. You will be surprised just how much good you have in your life if you take a minute to think about it. You might also consider unfollowing or unsubscribing from social media accounts that make you feel jealous, discontent, or inadequate. Instead, try to find things that help you to feel more gratitude and appreciation for what you already have.

Do you have any strategies that have helped you budget more effectively? If so, please share them below!

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