10 Ways to Stick to your Budget and Jump Start your Savings
New year, new goals, right? The common trend is we all try to become better people to set the tone for the rest of the year. Managing income is always at the top of the list, mainly due to heavy spending during the festive season. But sticking to a set budget is not easy. Yet sticking to a budget is very important and helps you reach your goals. Budgeting is a valuable technique to learn once you get the hang of it. Unfortunately, It has a steep learning curve for most people. Below are ten ways to help you turn for finances around
1. Don’t make large purchases
If it isn’t something you require, give it a week to think about it. Is there a payment plan (like a car loan) that will make your budget go out of whack? Will you lose your funds as a result of this? What impact will this have on your day-to-day activities? Is the advantage worth the price?
Make sure it adds value to your life and doesn’t hurt your wallet. If you forget about it after a week, it’s a pretty strong indication that you didn’t need it.
2. Never spend more than earn
Getting into debt can be a complex cycle to break out from. The money you borrow costs you more in interest than if you didn’t borrow it at all.
Put off buying something you desire if you can’t afford it for a week. Plan ahead of time if you want to go on vacation. So that you don’t throw off your budget, save regularly.
It’s unlikely that eating instant noodles for four months after a vacation qualifies you as “living your best life.”
3. Keep your credit card limit modest
High-limit credit cards are easy to get but hard to pay off. Don’t give in to temptation! Keep your credit limit modest and pay it off more frequently to avoid imprisonment.
Stick to a limit you can pay off at once as a decent rule of thumb (e.g., using an emergency fund). So, you’ll be able to pay for your purchases with little or no interest while also building up your credit.
4. Cut your spending to zero
Budgeting to zero means that your income minus your expenses equal zero when you establish your budget.
Expenses minus income equals $0
When you budget to zero, every dollar you earn is put to work, whether in savings or a loan payment. You don’t include a buffer or extra padding in your calculations. This is a novel approach to gaining ultimate financial control.
Spending every dollar you make is not the same as budgeting to zero. It also doesn’t imply you’ll be stuck with your categories for the entire month. On the contrary, putting your savings into your budget and keeping that budget flexible so it may vary with the curve balls life throws at you is a terrific way to start a savings program.
5. Make every effort to avoid incurring any expenditures
You can use a spending freeze, spending fast, or a zero-spend challenge to describe this type of challenge. Whatever you call it, the concept is the same: a vow to spend no money on anything that isn’t necessary.
A no-spend challenge can be done for a week, a month, or a year! It may appear extreme, but it’s a highly effective technique to shock your system, cut spending patterns, and shift your money thinking.
Begin your no-spend challenge by writing down what qualifies as a requirement and how long you plan to go without spending. Put your best friends or family members to the test to see who can save the most money to make it more fun.
6. Reduce the number of subscriptions
Do you need both an Apple Music and a Spotify subscription? What about cable, Netflix, Amazon Prime, Hulu, CraveTV, and other streaming services? Most likely not. All of those ‘just $10 a month’ fees quickly mount up.
Take a look at your finances if you want to avoid expenses. How much do you spend on subscription charges and transactions on top of that?
7. Make a meal plan
The simplest ways to keep your money in your pocket are planning your meals and sticking to a grocery list. You won’t overbuy products that will go bad in your fridge (and then throw them out – a waste of food and money) if you plan what you need for the week.
BONUS: By not buying unhealthy things that don’t fit into your meal plan, you’ll probably eat healthier as well. Choose recipes with similar ingredients so that your shopping list and budget are in sync.
8. Shop for groceries online
If you’ve ever gone grocery shopping on an empty stomach, you know how many unnecessary items end up in your basket. These small $2-$5 additions can sometimes account for the majority of your grocery bill.
Have you ever gone to the produce department and felt pressured to improve your eating habits, tossing vegetables you can barely spell into your basket, only to have 75% of them go wrong in your fridge?
Most grocery stores in Canada allow you to shop online and pick up your groceries at the curb or have them delivered to your home. Shopping for groceries online saves you not only time and money but also eliminates impulse purchases. Most of the time, you can save your grocery list for future visits, which will help you stick to your grocery budget.
9. Make a brand comparison
On average, name brands cost 8-9% more every supermarket trip in Canada than generic products. That may not appear to be a hefty sum per item. However, it can quickly pile up on a single shopping trip. Think about how much money you’d spend on a brand name if you went shopping twice a month for a whole year.
Consider whether that Name Brand item is genuinely worth the extra money. It’s sometimes worth it to spend a bit more money on a high-quality item that you won’t have to replace as frequently. You want to ensure you’re getting quality rather than merely brand real estate when you pay extra.
Compare and contrast the retail and name brands. What are the nutrients in food, for example? Are they nearly identical, with the same ingredients and daily intake values? If that’s the case, what’s the point of spending more money on essentially the same thing?
10. Link your expenditures and your job
You put forth a lot of effort to earn your money. However, when it comes to spending money, individuals rarely consider the labor that went into its creation. So you buy that $100 pair of shoes without giving it any thought.
However, considering how much labor those shoes will require, you could reconsider their value.
This is how you do it: Figure out how much you get paid every hour. Divide your annual wage by 52 weeks, then by the number of hours you work per week. Then, when you’re purchasing something, calculate how many hours of labor it will require.
So the shoes aren’t cheap at all. They take 3 hours and 38 minutes to complete.
This is a simple method to reframe your money mindset by thinking about your entire budget in this way.
Bonus Tip: Reward yourself when you achieve your objectives.
Budgeting isn’t only about sticking to a set of rules. Use it to help you reach your goals, do the things you want, and live the life you want.
So enjoy yourself. Reward yourself for staying within your budget to make the task more enjoyable. It will transform your perception of budgeting from a job to a pleasurable hobby. And click here to learn more about it.