Money Bite-Size Read:
- Many people hate the idea of a budget.
- The key is to make a budget that you’ll actually stick to.
- Here’s the money do’s and don’ts on making a successful budget that will work for you to save you money.
The Money Bites Take:
The key to making a successful budget is putting together a plan that you’ll stick to long-term.
Budgets don’t work.
That’s something I’m very used to hearing from people selling a product or who have given up. They compare a budget to the cabbage soup diet and don’t monitor how they spend money.
The trick to a successful budget is to make it work for your life.
If your finances are stressing you out, your priorities are to maximise your income and minimise your expenditure. A good budget takes the guesswork out of this process by showing where your money actually goes.
Here’s the money do’s and don’ts on making a successful budget that will work for you:
1. DO recognise why you need a budget
It’s important to get clear on your motivation to use a budget. Whether it’s gaining control over your spending or reaching a savings goal, clarify why a budget is important to you.
2. DON’T pretend you don’t need a budget
Many people trying to market you a product give you the excuse that budgets don’t work. Ignore the sales pitch and take responsibility for your spending decisions.
3. DO monitor your spending first
While a premade solution like the 50-30-20 budget may work for some, the most effective budgets work from your current habits. Write down what you spend for a month or two and work out what you can save based on this.
4. DON’T ignore your fun spending
When putting together a budget, you might be tempted to be strict on yourself. Instead, allocate money for what you enjoy so that your budget is sustainable long-term.
5. DO decide how you’ll track your spending
Decide how you’ll keep tabs on your spending over time. Whether it’s a budget app, writing it down by hand or using your bank’s app, decide how you will monitor your spending over time.
6. DON’T forget to update your budget
Your life changes over time, including your spending costs and salary. Update your budget accordingly so that it reflects your current lifestyle.
7. DO prioritise your emergency fund
If you’re aiming to save money from a budget, building an emergency fund should be a priority. That gives you money that you can get quick access to when you need it the most.
8. DON’T ignore your household members
If you live with people or are part of a couple, you need to incorporate them into your budget. That includes shared food costs or ensuring going on budget-friendly dates.
9. DO automate your savings
Take the guesswork out of your budget by automating it. That includes automating transferring money to your separate savings account, so you’re not tempted to spend it.
10. DON’T overcomplicate it
When learning how to budget, keep it simple. Every budget essentially comes down to income minus expenses to save you money. Everything else is detail.
The most successful budget is one that helps you achieve your goals.
It needs to be sustainable so that you stick to it long-term. That’s why making a successful budget must start from your current spending habits and make any savings plan work for you and your lifestyle.