Most of us start the new year with goals and resolutions. Unfortunately, as the year proceeds, we tend to get busy in our day-to-day lives and forget our resolutions. Budgeting is one of them. It is not a fun activity to do. Here are a few tips on how to stay on budget and save money.
Disclosure: This post contains affiliate links. For full disclosure, read here
Most activities required for success are dull and must be done repetitively.
We cannot create a budget in one month or skip the next. A budget is a plan for your money and a clear picture of how you are going to use your money.
How to stay on budget and save money
How to create a budget
There are many ways to create a budget, but a realistic and straightforward budget can do wonders for your financial health. You can create a budget as you like. There are a few ways to create a budget.
1. Traditional Budgeting system
Traditional budgeting consists of allocating the money to all the expenses and then saving what is left. The problem is that you never have any money left to save. Therefore, being strict with your money rules is a good idea.
2. Reverse Budgeting
This method will save towards your saving goal and then spend what is left after. This budget method is better as you pay yourself first, then start with all other spending needs. Reverse budgeting is good for easy budgeting and saves money every month.
It is like paying yourself first and then arranging the leftover money according to your needs.
3. Balanced Money Formula
Balanced money formula is a budget planning framework outlined by Elizabeth Warren and Amelia Warren Tyagi in the book ‘ All your Worth. ‘ According to this formula,
50 % of your income should go to your needs
30% for your wants and no less than
20 % into savings
This will urge you to control your needs and wants so that you will have at least 20% of your after-tax income to save.
Which budget system is for you?
It depends on you which one you like. Or you may try each budget system and see what works for you and your household. You may find a midway between the two systems.
Now, it will be easy to figure out the budget system. And if you are already budgeting but find it challenging to stick with the budget, try these hacks on how to stay on budget. I am sure you will find this helpful.
1. Track your spending
To start creating a budget, knowing where your money is going is essential. So before cutting your spending and starting a budget, track your spending for a month or two.
Knowing your spending habits makes it easy to cut spending and stick to spending on only needed items.
How to track your expenses
2. Create an emergency fund
Building an emergency fund helps give you a cushion against any emergency we are facing now. There is uncertainty everywhere, and we don’t know when things will be better.
Also, an emergency fund helps in sticking to a budget by providing you security if any emergency arises. A robust emergency fund saves you from taking money out of your credit cards.
How to create an emergency fund on low income
3. Do it on the same date
This one has been so helpful in keeping me motivated each month. I always make sure to create a budget on the same date. Then, if I cannot do it on a particular day, I do it the next day.
Keep a reminder on a calendar that sits on your table. And out a reminder on your phone also.
4. Pay yourself first
Paying yourself first means saving your account first. A growing savings account is a great motivation when you want to budget. Paying yourself first will always prompt you to sit to create a budget.
Make this one automated. And if you are left with more money after creating a budget for the set month, save that also. I don’t know about you, but saving money makes me happy.
5. Keep it simple
One more aspect of an operational budget is its simplicity. If you make it complicated, you will dread working on it. But, on the other hand, simple things are easy to manage, and working is also easy.
6. Make some saving goals
Saving goals help you to keep motivated. Keep your saving goals in front of your eyes. It will motivate you to stay on budget. This is the way you will be able to save money.
7. Assign some money for fun activities
You will quickly get frustrated with your budget if you do not keep the money for fun activities. Fun and entertainment are necessary for keeping you motivated.
You may be tempted to stop budgeting if you do not entertain yourself.
8. Automate as much as possible
This one is the real deal-breaker. It saves you time, and you have to put less effort into your budget. Automate your savings even before they hit your bank account. Also, you can automate debt repayments, bill payments, savings, etc. These will make the budget less complicated.
Many apps and even bank accounts can help you with this.
9. Record your spending
Record your spending each week. This will give a clear idea if you are going on track with your budget. Moreover, you can make any changes in your spending habits if required.
10. Keep one spending account
You may have different bank accounts, but try using only one account for all the spending. Pay everything, like mortgage, insurance, grocery, school fees, etc., from one account. Consolidating your spending will help you keep an eye on how much you are spending.
11. Delete all the shopping apps
The biggest hurdle in sticking to a budget is the temptation to buy those items you don’t need. I have one of my friends who is always looking to buy things. Ask her about anything. She knows about every big store and online shopping portal.
To save yourself, delete all the shopping apps. It will keep you from impulse buying and saves a lot of money.
Whenever I have some heated arguments with my husband, I go shopping. I spend money to make him jealous, and this makes me happy.
12. Keep your budget realistic
Don’t go overboard and try to cut most of the spending. For example, if you love to go to outings every weekend but are not allocating any money for this activity, you will throw in the towel easily.
Keep it realistic and start cutting unnecessary spending one by one so you will not feel the absence of entertainment.
How to eat healthy on a tight budget
13. Live below your means
You can save money by earning more or by saving whatever you have. Instead of living a life king-size and buying everything you want, try to live below your means. You don’t need to have a lot of flashy things to show people. You need to live a fulfilling life. This will help you in sticking to your budget.
If you have a good amount of money now, keep it for the future. Never spend all of your money once you get it. Living below your means and earning money wherever possible is the key to saving money.
14. Think positively about future
If you want to save for the future, you should be optimistic about your future. Think about it. If you think you will die tomorrow, you will spend everything today. You would love to do everything today. But if you think you are going to live, say, another 60 years, what would you do? You will like to save for those years when you will no longer work.
But you would love to live a comfortable life. It is up to you what age you want to retire and want to live comfortably after that. I am planning to retire in the next five years. And I am optimistic about that. I have designed for those years.
15. Delay the gratification
You are so desperate to buy that lovely piece of jewelry that you cannot resist the temptation. But, if that temptation will give you happiness for a week and then diminish, then there is no value in buying that.
I can tell you from experience that a jewelry piece gives happiness for only a few days. Or a few times when you wear them. After that, it has no value in terms of money and happiness.
It is only for immediate gratification. ( If it makes you happy for a long time, go for it.). We all have something that makes us happy for a long time. For me it is clothes.
If I buy a dress, it will make me happy for at least two years. But thankfully it is not a very expensive thing to do. When you delay the gratification and urgency to buy something now, after a few days, the urge will diminish. So postponing the gratification will boost your savings and help you stick to the budget.
- 21 tips to save money on a very tight budget
- Simple tips for planning a no spend a month
- How to enjoy life when you don’t have enough money
If you want to start making money online, start doing surveys. You will not become rich, but you can increase your emergency fund or your build retirement fund with this extra money. Here is one of my favorite survey companies
Survey Junkie: I use Survey Junkie to make money in my free time. It is easy to find high-paying surveys at Survey Junkie, and you can earn good money as a side income from the comfort of your home. You can redeem the points as money or as gifts.⭐ Sign up for Survey Junkie and start earning money right away