12 Secrets to a Successful Budget
There are many secrets to a successful budget, but these are the ones that have worked for me! It’s important to be flexible, and to understand that learning a new budget will take time. Be okay with that fact, and things will run smoothly (or at least smoother than they would have originally). In our 8 years of marriage, our budget has changed several times. Sometimes because the change of income or other times because we needed to make room for new obligations.
1. Have a goal. Not just a random-maybe-some-day goal, but an actual exact goal. Whether you want to save $3,000 to take a family vacation, save $10,000 to put a down payment on your first home, or just pay your credit cards off… a clear and actionable goal is the first step to a successful budget. Keep your eye on the prize, and you will achieve your specific goals much faster than if they were just general ideas.
Tip: I’ve found that making goals that are not time restricted make things seem more possible. (example: Save for vacation in 3 months– better goal: save $1200 for a vacation)
2. Keep a timeline. Figure out how much you need to save each week (or month) to achieve your goal in the time frame you’re hoping for. Obviously, sometimes things do come up. That’s okay! Just pick up where you left off, and adjust your timeline as needed. However, be strict when adjusting the timeline. If you know you can readjust as needed, you might not be as motivated to save.
3. Keep it simple. Your budget can be as simple as you want it to be. Whether you have twelve categories, or three categories, the key is to keep track of incoming and outgoing. So, you have your income category, and your expenses category. From there, divide the expense categories up. Household bills, debt, savings, giving – four categories that keep it super simple, while still getting the job done.
If you’re trying to cut back on spending in a certain area, create more categories. Entertainment, eating out, shopping, etc… these are all things most of us can cut back on – and will if we see in black and white how much we are spending each month.
4. Track your spending. Like I just mentioned in Tip #3, if you’re trying to cut back on your spending, you have to track it! No, it’s not fun to realize you’re spending $100 at Starbuck’s each month – or that every time you “run to Walmart for one thing” it’s a $200 trip, but it’s necessary to get on track with a budget.
Tip: Quicken is a great way to track your spending. Link it to all of your accounts!
5. Be honest with yourself. To follow up on tracking, being honest with yourself is also necessary to get on track – and stay on track – with your new budget. Be realistic about what you will and will not cut out of your budget. Will you really give up your coffee every morning? Maybe, maybe not – but don’t say you will, when you probably won’t. Just factor it in and budget as necessary.
6. Buy gift cards. If you are serious about cutting back on your Starbuck’s habit, buy a $50 gift card at the beginning of the month and when you’re out, you’re out. You can do this with Amazon, Target, pretty much any store really – wherever you need to cut back.
7. Give yourself a reward. If you stay on budget for three months, you totally deserve a reward! So, plan for it… stay on track… and deliver. Whether it’s an extra gift card to a shoe store, or a night out with your significant other, rewarding yourself is a great way to help keep your eye on the prize and realize your why for budgeting.
8. Review your budget. It’s important to review your budget on a regular basis – not only to see what isn’t working, but to see what is working. I think both parts are equally important, because without knowing both, you won’t be as successful.
Are you saving the amount you thought you would each month? Is it going towards the goal you originally set, or do you need to change your goal a bit? Are you still spending too much on shoes, or did you do really well at cutting back? Do you have some wiggle room? Tighten it up a bit by putting even more into savings (or into paying off debt).
9. Make it automatic. If you haven’t yet, make your savings contributions automatic – meaning, a set amount should come out of your paycheck each week without you having to blink an eye. Automatic deductions help us so much!
10. Pay with cash. While paying with a credit card is great (especially if it has rewards attached), paying cash keeps you accountable. Instead of picking up an extra thing here and there while you’re grocery shopping, you’ll be more likely to weigh how much you really need each item if you know you have a limited amount of cash on you.
11. Don’t Stop. I want you to keep in mind that budgeting isn’t always easy! It’s just like learning any new skill, changing your diet, or even trying to lose weight – it takes work. So when something doesn’t go perfectly, don’t get too stressed out. Just pick yourself up, dust yourself off, and do better next time. Believe that sticking to a budget is possible, and it will be.
12. Forgive yourself. If you do mess up – by splurging on an outfit you really didn’t need, or by spending too much on date night – forgive yourself! It’s the only way to move on and do better next time.