We can discuss better budgeting! Budgeting has a negative connotation for many people, so let’s focus instead on enjoying it.
First, change its name if it doesn’t give you that blah feeling. Don’t call it a budget. My plan is my “glow up” because it makes me responsible, and my money is flowing in my favor.
Did it not work for you, or was it that you were not realistic about it? Budgets work, but you must be honest with yourself. Your goal is to have every dollar work for you instead of against you. the other way.
Every budgeting strategy is not the same for everyone. You have to find a method that works well for you. Whether it’s the envelope approach, the zero-based method, or the cash diet method, something has to stick.
I like to switch between using a little of each according to my current health, it works, and it makes sense. The key is not to blindly follow your current protocols, but to understand why you are not working and how to allocate funds better.
Why your budget isn’t working
Budgeting has benefits and drawbacks, so you need to understand the reasons why your approach is failing.
1. You didn’t count all of your real expenses
Budgets should not be restrictive. In fact, they are an important document that describes your input and output of cash. If you don’t have services like Netflix, Hulu, and so on, you might go over your monthly budget. If your monthly expenses are nonexistent, your budget is the same thing. I just wanted to let you know.
Be sure to pay all expenses each month. A great way to do this is to cut up a piece of paper and list all of your debit and credit card recurring expenses.
2. Spending more than you’re making
Creating a budget that does not match your expenditures is a common error. You should consider not only what you require, but also what you can live without.
If you need every dollar in your budget, it’s time to determine how to make extra income to cover your expenses, so you don’t always go into the red.
Money is as accessible as selling your clothes on Poshmark or creating an additional job on the side. Determine what you love to do and get started.
3. You forgot to make room for “fun money”
If you have the budget, then you should certainly make a line item for “entertainment money.” Let’s keep it real here; no one wants to not have any money to do some of the things that they like.
Every month, I use a certain amount of money to go out to eat, entertainment, and other purposes. It lets me avoid feeling deprived as I spend my expenses and prioritizes paying down debt and saving money.
However, there are times when you will need to cut back on the fun money you have, but you must keep the line item for emergencies.
5 Key steps to better budgeting
Now that you understand the reason why your current budget isn’t working, try these 5 tips to create a better budget.
1. Pick a better budgeting method
Sticking to a budget can be hard, but it can be even more difficult to do so if you select a budgeting plan that isn’t appropriate for your financial situation. If you lead an extremely hectic life, then you should simplify your budget, and it shouldn’t be too time-consuming.
The 80/20 budget plan may be a good choice for you because it is easy to conduct.
With this system, you allocate 20% of your income to your savings account, with the rest going to your other expenses and other needs. If you make $2,000 every month, $400 goes straight into your savings account, and $1,600 is available for everything else.
This lets you budget your money more easily because you don’t have to divide it into various percentages or categories. There are many different types of budget and cash-managing tools to select from. The key is to select what suits you best.
2. Pay yourself first
21% of Americans do not save money from their paycheck. It is so easy to postpone saving, so it’s often done last. When you “pay yourself first,” you put money toward your savings goals before spending any of your money.
When it comes to budgeting, paying yourself is one of the most effective ways to increase your savings. Create a savings goal, start saving before you spend any money, and watch your savings grow rapidly!
3. Automate your finances
The easiest way to better budget is automating your finances. Setting up direct deposit, automatic bill pay, and savings transfers will help you stay on budget and save time.
It could save you a lot of money by not paying late fees. Nevertheless, you should still review your finances on a monthly basis to ensure everything is being paid out on time.
4. Review your budget monthly
It’s important to vary your budget plan every month because no two are alike. For this reason, you must create a monthly budget if you want to be successful financially.
You may have upcoming expenses that you didn’t have the previous month or may need to change your debt payment plan because you recently paid off a credit card. Whatever the situation may be, checking in making a budget every month or even every paycheck will prevent you from having financial troubles.
5. Cut expenses
Reducing costs is essential to better budgeting. Cutting cable, removing unused subscriptions, and shopping more frugally at the supermarket can spare you a substantial amount of cash.
If you can cut $100 from your budget every month, that amounts to $1,200 in a year. Cutting costs whenever possible is the best way to budget well.
Better budgeting will save you more money
Budgeting is only a portion of managing your funds. Changing your mentality and beliefs can improve your financial journey.
Budgeting is a lifelong process. Pivoting is necessary for all parts of your life if something is not working. You should stick with something you find easy.
Learning how to budget well and adjusting your budget can help you avoid overspending and save you more money. Learn more about how to create a budget with our completely FREE course!
You can also check out our featured budget prices to keep you motivated on your budgeting journey!