Budgeting might be the single best financial habit anyone can build. It’s not the sexiest or the most fun, but maximizing your income can open the door to all kinds of possibilities and future income opportunities.
It takes discipline, willpower, and – at times – creativity. Here are a few tips to help you budget smarter and get the most out of your paychecks.
Without discipline, your budget journey won’t be successful. So before you even start on a spreadsheet or with an app, make sure you can stick to it.
Discipline isn’t something you can muster out of thin air. And it’s not a skill you can simply read a book and master, either. But you can develop discipline over time. Here are some ways to build it:
- Always keep promises to yourself. Build a habit of following through on the things you say you will do – even if no one else knows about them.
- Do hard things. Intentionally doing hard things or putting yourself in difficult situations can do wonders for your discipline.
Create a System
To budget well, you need a system. If you’re already using a complex spreadsheet or an app, keep it up. But if you’re guessing at things each month, it’s time to get to work.
A spreadsheet or a notebook is all you need, but it can take time. So only go this route if you insist on doing things analog. If you’re ready to jump into the 21st century, there are countless apps and software (some free) that can help you budget. Some will even connect to your bank accounts and automatically categorize your expenses.
Whatever you do, build a system that works for you and stick to it.
Get Creative to Cut Expenses
Once you have a system in place, it’s time to do some pruning. Some expenses will be easy to cut – like that Showtime subscription you haven’t used in ages and the luxury massage you get each month.
Once you’ve tackled the low-hanging fruit, it’s time to get creative. Look at your expensive categories and ask yourself, “How can I spend less here?” It’s a simple question, but you should fight for a creative answer. Maybe you can quit driving to work because a bus route is a block away. Perhaps you can spend a lot less on groceries if you meal prep.
Cut out the unnecessary expenses – no matter what it takes.
Save or Invest the Remainder
Budgeting just for the sake of budgeting is pointless. But budgeting to save for a goal or to make your excess money work for you is brilliant. Find good investments to put your saved money toward.
Another place to put your savings is into an emergency fund. No one likes to think that their car will break down or they’ll be injured, but it can happen. And if you don’t have great auto insurance or a personal injury law firm to help you recoup your damages, you’ll need rainy day money.
Don’t budget for the sake of it. Make the money you save go to work for you. Your future self will thank you for it.