Budgeting Part 6: Keeping your budget on track
Sabah Karimi • June 11, 2014if( has_post_thumbnail( $post_id ) ): ?>
We’ve been guiding you through the process of creating a healthy household budget these past couple of weeks and this week’s post wraps up our budgeting series with some tips for staying on course.
Your budget won’t work unless you make a commitment to stick with the plan. Like a healthy diet, you can’t expect it to work until you make some lifestyle changes. You might not need to do a complete spending overhaul to get results, but you will need to hold yourself accountable and make sure you’re being realistic with your goals.
Here are some simple ways to keep your budget on track:
- Set weekly goals. Don’t wait until the end of the month to figure out what went wrong or why you couldn’t meet your monthly goal. Set weekly goals and monitor your spending closely — at least for the first few months — so you can identify any spending leaks before they make a dent in your budget. Setting weekly goals and keeping track of your spending can make you more mindful about your spending habits so that budgeting is just a little easier.
- Recover quickly. Emergencies happen and you may end up spending more than planned in a given week. If you end up going over budget, don’t use that as an excuse to go on a spending spree or give up altogether. Just assess the damage and acknowledge where things went awry. Correct your course quickly so that you can get back on track and recover from the setback.
- Don’t cut out too much. We talked about the benefit of making room for miscellaneous purchases in your budget in a previous post. Remember that cutting out too much too soon can backfire and can make it that much harder to stick with a budget. That $5-a-day coffee habit can add up over the course of the month but if it adds something to your life — the opportunity to socialize with other coffee lovers, the ability to work remotely from the coffee shop, or a change of scenery during a stressful day — it may be an expense worth having. Be as thorough as you can when listing expenses but make room for some extras that improve your quality of life.
- Operate on a cash-only basis. Break credit card spending habits so that you are only working with money you actually have. Even if you plan on paying off the balance in full at the end of the month — hey, credit card rewards can be a good thing — it can be tricky to keep track of those expenditures and avoid the temptation of spending more than planned. You’ll find it easier to keep your budget on track when you spend only what you have and aren’t ‘pre-paying’ for purchases that you haven’t budgeted for.
- Use smartphone apps to your advantage. If you have a hard time tabulating expenses for the week and want to get better at monitoring your spending habits, start using a smartphone app. We recommended Expensify or the Billguard’s spending tool to track your spending. Mint’s budgeting app also makes it easy to log expenses using your smartphone or other mobile device. You can categorize and organize your spending to see trends and create a budget from the data. Level Money is a personal finance app that divides your income into categories and connects to your bank account for real-time data tracking. You can see how much spendable cash you have with a few screen taps and watch your savings account grow at a glance.
- Revise and update regularly. Don’t expect to have the same budget a few months from now. Emergencies happen, you may change jobs, or you might get a raise. Revise and update your budget regularly so that it’s as accurate as possible. Adjust your goals based on your needs and revise the budget to accommodate for lifestyle changes. Revising and updating your budget once a month or every few weeks can help you stay on course.