1) Use Cash Over Plastic
Your credit and debit cards are very convenient, but they make spending far too easy. Switch to cash for your discretionary spending and keep yourself from overspending.
At the beginning of every week, take out the amount of cash you have budgeted and do not allow yourself to withdraw any more. It might be easy to purchase that cool new video game or that perfect handbag with the swipe of a plastic card, but cash is much harder.
If you see that your purchase is going to wipe away all of your free money, you tend to think twice. Plus, we naturally have more emotion wrapped up in our hard currency versus a plastic card.
2) Set A Budget Goal
If you set a goal, it is much easier to stick to a budget. Making sacrifices without a reward at the end will only lead to failure, so set a goal such as a savings target or a paid off credit card.
Track your target on a weekly or even daily basis so that you stay motivated. Charts and graphs can also be used t give you a quick visual representation of your progress. When you think about spending unwisely, think about your goal, look at your graph and consider how much the additional spending will set you back.
3) Eliminate Unhealthy Habits
It is amazing how much money unhealthy habits cost. Alcohol, tobacco, gambling and fast food all have negative consequences on your health and you pay for the privilege. Start trying to eliminate your unhealthy habits and divert the money into something healthy like savings. You will feel better and you will reach your financial goals quicker.
4) Get On The Same Page
If your partner is a free spender, it will be hard to get on track and stay there. You will be more likely to splurge on unnecessary expenses and/or your partner will just undo all of the good work that you do. Luckily, you probably share the same overall goals, so if your significant others habits are getting in your way, sit down and have a frank discussion about the direction you need to be taking.
5) Pick A Card, Any Card
Well, preferably the highest interest card.
Pick one of your credit cards and concentrate on paying it down. You likely have multiple credit cards, so pay the minimum on the rest of them and concentrate on just the one card.
The problem with credit card debt is that it can get overwhelming. If you try to attack it all at once, you will get discouraged. Concentrate on the one card and get it paid off before attacking another card.
Once you have that debt paid down, you can use the money saved on payments for a better purpose, such as boosting your emergency savings.
6) Track Your Spending
If you are having trouble staying on budget, it could be because you are spending more than you think.
Take a week and carry a small notebook with you, everywhere you go. Then, write down everything that you spend money on, even if it is just a few dollars. At the end of the week, total up your spending and you might be surprised at where your money went.
7) Balance Your Checking Account
Do you ever find yourself shocked at how much money is in your account or maybe even surprised at a low balance? It is probably because you do not settle your checking on a regular basis.
The days of using a checkbook register to balance are long gone, with check use being rare these days. A better alternative is to build a simple spreadsheet with your account balance. You can then easily record expenses and have the amount automatically reduce your balance.
8) Have Flex Money
If your budget is too rigid, you are doomed to break it. Life is unpredictable and costs go up and down, so add a little flex money into your budget. It doesn’t have to be much, maybe just 100 dollars a month. Having this flexibility will help keep you from abandoning your budget when things do not go according to plan.
9) Have A Waiting Period
For big unplanned purchases, you should have a waiting period. If you make yourself wait one or even two days, you will have an opportunity to change your mind. In fact, most of the time, you will find that you no longer want to spend the money.
How much is a big purchase though? It will vary for everyone, so it could be 50 dollars or more, it could be 500 dollars or more and it could even be 1000 dollars. Everyone has a different budget and different spending limits.
10) Overestimate Variable Expenses
A portion of your bills like water, electric and even fuel can be hard to anticipate exactly. If you try to nail them down to the penny, you will probably find yourself wrong from time to time and this can cause some budget shortages.
Overestimate these bills by 10 percent so that you do not get caught unaware. If the highest electric bill you have is generally an amount around 200 dollars, budget 220 dollars. Should you typically spend 100 dollars a month for water and sewer, budget 110 dollars.
Overestimating will ensure that you have enough money for each budget category and you can always just dump any unused funds into savings at the end of the month.
11) Identify Your Triggers
When we overspend, it is often because something has triggered us to do so. It could be boredom which leads you to start shopping online or it could be walking around the outlet mall with your friends. Whatever the case, try to identify what triggers you to spend outside of your budget and make some changes. Either eliminate the triggers entirely or consciously realize their affect on you so you can be prepared.
