Streamline Your Spending: Essential Budgeting Tips for Daily Life

Having a budget is almost like having your GPS set to the fastest route to get you to your destination, but instead this destination is financial stability. The fastest route tends to be on highways, where you are avoiding residential and commercial areas, making you less likely to stop at a friend’s house or at the mall because you won’t pass that on a highway. When you have a budget, like when on the highway, you’re less likely to make stops and impulse purchases. Even though you may know how to get there, the GPS keeps you on track and if you get lost, you're immediately given an alternative route…a budget works in a similar way as it keeps you on track with managing finances. If you’ve never created a budget before, you’ve come to the right place and if you currently budget, stick around — you might learn a trick or two! It’s never too late or early to start budgeting, here are some tips to add to your routine to get you started:

Keeping Tabs on Your Spending

Tracking your spending is a crucial part when creating a budget, by helping you to put all of your spending habits on paper and seeing what you tend to spend on the most…whether it’s food, entertainment or just random miscellaneous purchases. By tracking your spending, you will begin to notice a trend and if it’s a trend that is negatively affecting your wallet, you can get on top of it. There are a few ways that you can track your spending, it all depends on your preference:

• You can use a notebook and hand write all of your purchases, you can do a weekly, monthly or quarterly budget.

• You can use a platform like Notion and find an expenses template and type in all of your purchases.

• You can use an app such as Mint which will automatically track your spending and you can manually add cash transactions and other types of transactions that Mint will not record.

When creating the budget manually, you want to ensure that you include the item or service purchased, the category (dinner, bills, and etc.), if it is a variable or fixed expense, the amount and the date the item was purchased. This will allow you to get a better big picture view of your spending habits and you’ll begin to realize not only what you spend your money most on, but also what times of the year you happen to spend the most.

A Purpose for Every Dollar

For a budget to be effective, assign a purpose to every dollar. Your fixed expenses such as bills and rent/mortgage tend to stay the same, so it should already be allocated into your budget. However, for your variable expenses such as food, clothing, entertainment, etc., set a realistic spending limit for each. This will help you be more aware and intentional of your purchases and avoid impulse purchases. When putting a cap on your spending for each category, be sure to leave room for unexpected expenses because, unfortunately not everything will go as planned! But, assigning a purpose to every dollar will get you on the quickest route to financial stability.

Ready..Set…Goal

Having a financial goal will help you stay on track when creating a budget; whether you’re saving for a pair of sneakers or saving for a new house, setting a goal and having a plan to accompany that goal will get you there in no time. When you set a financial goal, you have a potential end result that will keep you motivated, accountable, and encourage you to prioritize your budget. Because of the accomplishment that’s waiting on the other side, that financial goal will also provide you with some clarity and encourage you to prioritize budgeting effectively. You might cut back on subscription services, takeout, and hanging out with friends just to hit that goal even faster because having a financial goal can serve as a huge motivator to budget and you’re more likely to reduce expenses in areas that aren’t necessities. When you have a goal, you know your exact destination and not just the neighborhood that you have to get to; so think of something you might desire and set it as a goal and after you accomplish it, cross it off the list and set a new one!

Power of Automation

Automation is like having your very own personal assistant and it makes life that much easier. You tell it what to do once, then all you have to do is set it and forget it. Automation can help you budget via automatic transfers. You can start off small and have an amount that works for you to automatically transfer from your checking account to your savings account, as often as you’d like! Once you start, you won’t even think about the money that’s coming out and you can raise it or lower it to a number that you are comfortable with. Automation can help you budget because it’s the laid back approach and you’re simply in the passenger seat waiting to get to your destination.

By implementing these essential tips and strategies when budgeting, you will streamline your spending and have better control over your finances. If you’re new to budgeting or a pro, always remember to make changes if needed, life is unpredictable, so you can’t always stick to a budget. If you are new to budgeting, you may find that you need to make a few changes, don’t be afraid to make those changes if needed. If you happen to overspend in one category, consider evaluating how you can cut back in that category or reduce spending in another, but just keep in mind that change doesn't happen overnight, but is a gradual process. Happy budgeting!