Tips for Budgeting Smarter

If you are like most, you think of  “budget” as something that restricts your lifestyle.  To some degree, a budget does force you to reevaluate your spending.  But, it doesn’t have to be a negative experience.  With some thought, you can develop a budget that puts you in a position to enjoy your money without putting you into significant debt.

A budget should allow you to manage your finances in a way that will enable you to reach your financial goals and live your life.

The following tips can help you create a budget that does just that.

Have a Fund for the Unexpected

The unexpected will happen to you at one point in life, and it may be expensive. If you already have some savings and regularly invest them, make sure to keep some cash on hand. It’s also important to define how much you should have on hand and make a plan for replenishing or taking money out of this fund.

Define Your Needs

Know what you need to keep the rent or mortgage paid and keep your lights on as well as any necessary transportation expenses to take you to and from work. Other utilities also fall under this category. Entertainment expenses do not. For anyone with a variable income, this step is vital. You need to know what you need before you can budget for anything else.

Prioritize Your Wants

Once you know what the essentials cost, you should make a list of things that should be done and a list of things you want or want to do. You can then rank these lists in order or most immediate needs to things you can put of for a while.

This will clearly show you what your priorities are and serve as a reminder in case something comes up. You can revise this list, but try to complete the items near the top and work your way down. This will help keep you on budget.

Consider Payment Plans

For many, keeping back a certain amount every year for a yearly expense, fixed or variable, can be difficult. That’s why some services, like the gas company, offer payment plans. These may even come bundled with a discount of some kind.

Track Everything at Regular Intervals

Don’t put off managing your budget to one night a month. Track your expenses as they happen. Software and apps can help make this incredibly easy.

Budget for the Year

For most people getting a regular paycheck, it makes sense to plan for significant expenses in advance. If you are shopping for Miami condos and all the costs that come along with moving, that’s an expense you’ll want to budget for.

Redistribute

For many, learning to cook and eat at home will allow them to enjoy their favorite meals more often than if they were to dine out. Still, the average household spends nearly half of their food budget of eating out. The same tactic can apply to any situation- are there any small things you like but could give up for something you enjoy more?

Allow for Indulgences

Treat yourself once in a while. If you manage to stick to your budget, you deserve something for it. If things are tight, that something doesn’t have to be much, but it should be enough to feel like a reward. Creating a budget and following it shouldn’t feel like a punishment.

Don’t Tempt Yourself

Just browsing furniture stores and online retailers can make you more likely to spend on something that’s not in your budget. Flipping through magazines and catalogs in a waiting room or reading marketing emails on your phone can do the same thing. Avoid the temptations where you can in order to stick to the budget you took time to create.

 

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