You have analysed your past expenses, put them into spreadsheets, loaded Quicken with all of your data, and devised a budget. Now what? The tough part!
You must adhere to your budget and carry out your ideas. This is a much easier said than done proposition. Often, six months or a year later, you will have forgotten about your budget and financial goals. How can you avoid this from occurring to you?
Here’s how. Ensure you follow some of these tips below so this doesn’t happen to you.
Create a budget with realistic targets
As an example, suppose one of your financial goals is to avoid eating out for lunch or supper regularly. If you are really honest with yourself, you may conclude that this is an implausible aim. Occasionally, it’s beautiful to take a break and enjoy a calm, rewarding evening.
In other words, avoid setting an unrealistically high goal. Extreme and unreasonable goals are a definite way for your budget to fail.
Budget for expenses that don’t occur on a routine basis
Consider annual expenses such as Christmas gifts, birthdays, holidays, weddings, and automobile upkeep. These costs do not occur on a monthly basis, and they will wreak havoc on your financial plans. Please create a calendar listing these events and assign a monetary value to them.
Would you kindly list them in the month in which they are likely to occur so that you can prepare for their payment? The reason your budget will fail is not because of ordinary costs. These “gotchas” are what will wreak havoc on your budget if you are not prepared.
Put your budget in writing
Take the time to write down your budget plans. Making a mental note of your budget goals is a recipe for failure. Don’t assume that your financial future will take care of itself by making a simple mental note to yourself if you have your budget goals detailed in writing, and you can review and remind yourself weekly and monthly of your financial goals.
If you have a bad month or week, don’t give up!
Let’s say you have been reaching your budget goals for three months. In the fourth month, for whatever reason, you didn’t reach your budget goals. Maybe you even stopped trying to stick to your budget! If this happens, don’t just throw your hands up in the air and admit to failure. Everyone falls off the wagon sometimes. Your budget is a journey.
When things go wrong, it’s important to remember that everyone makes errors. Walter Hagen, a legendary old-time golfer, is the subject of a story I enjoy. Every time he played golf, he promised himself that he was going to miss at least four or five times. He would tell himself, “This is one of my horrible shots that I was anticipating,” whack the ball out of the bunker and go on if he hit his ball into a bunker during a golf round. It didn’t bother him in the slightest because he had already anticipated that he would have to take some freebies.
Adjust your budget over time
One of the most critical issues of our time is that personal budgets can take months, if not years, to perfect. In the beginning, you may have had to guess at some of the numbers in your budget plans. There is a possibility that they were not aware of the reality of daily life. As an example, you may have overestimated your monthly food or power costs.
Check to determine whether your initial estimate was overestimated by looking at all of the money spent in this area. If that’s the case, attempt to come up with a more exact number and stick to it. One of the best ways to ensure that you keep to your budget is to make this kind of modification.
Review your budget every month
This is where you will make any adjustments that are needed. Set aside the first day of each new month to review your income and expenditures and match them to your budget goals. You can adjust your spending habits by actively reviewing your finances and comparing them to your budget. This allows you to analyse areas that exceeded your budget expectations and adjust your spending habits or budget.
The goal here is to not forget about your budget. One tip that has worked for me is to put a printout of my primary budget goals on the refrigerator. That way, every day, several times a day, I would notice my budget goals sheet. I may not read it every time, but I notice it, reminding me that I need to stick to my budget. That is why tip number 3 is so important.
Set specific short-term goals
For example, let’s imagine you want to pay off all of your credit card debt in two years. It would cost you $10,000 a year to maintain a $20,000 credit card debt. In this situation, you’ll see a $2,500 reduction in your monthly credit card payments every three months. This is a more attainable financial objective. In my experience, if I break down long-term and intermediate goals into manageable, measurable steps, I am more likely to achieve them.
That’s right! Treat yourself when you reach some of your short-term goals. Since your financial budget is a journey, take some time to smell the roses on your way.
Sticking to your budget should not be a restrictive, unpleasant experience. Not only should you take the time to enjoy your financial accomplishments along the way, but use part of your budget for fun things that you enjoy. Just make sure your rewards don’t end up breaking your budget!
Pay yourself first
Saving and investing part of your salary is probably one of your budgetary priorities. One way to ensure your success is to immediately deduct it from your discretionary income, just like the IRS does with your paycheck. The money is put aside immediately away. Go into a savings account or mutual fund right away.
The majority of mutual fund firms allow you to set up automatic payments from your salary. Even if you’re doing everything you can to save, you may not be able to save as much as you’d want.