You probably know creating a budget and sticking to it is a great way to build your savings and meet your financial goals faster. But writing down your income and expenses isn’t the only budgeting suggestion out there. To help maximize your efforts and make progress quicker, here are some simple but potentially life-changing budgeting tips you should start following.
1. Create your budget as a family
It’s only helpful if you create a monthly budget and have your whole family, including your spouse and children, on the same page. Start by understanding the total of all take-home income. Then, sit down together and discuss expenses, such as bills, food, entertainment, gas, and other activities.
Help everyone to understand how much you’re spending vs. how much income there is, and work together to identify where you can cut back on unnecessary spending. Everyone is more likely to stick to a budget that you discussed and created together.
2. Start with what’s most important
Everyone’s lifestyle and needs are different. As you’re developing the budget with your family, focus first on what’s most important to you. Start with major living expenses such as rent or mortgage, car payments, and utilities. Follow this with a budget for groceries and food. Experts also recommend developing an emergency savings fund of at least three to six months of expenses.
Then, it’s up to you and your family to decide what’s next. Together, you can determine if going out to dinner once per week vs. saving for a vacation takes precedence—or, if having funds for extracurricular activities is more important than spending a day at the mall.
Not every family’s priorities will be the same, so build your budget off of what works for you.
3. Consolidate your debts
Even if you have bad credit, debt consolidation can help you combine multiple debts into just one, ideally with a lower interest rate. While poor credit can make this more challenging, you do have options.
High total debt can make saving and budgeting difficult because you’ll always have to prioritize making those monthly payments. However, consolidating your debt can make paying off your debt faster and easier, which makes budgeting more efficient and effective.
4. Stay flexible
No two months of expenses will be exactly the same. You may have to plan differently around summer months or months during the school year, as well as around holidays, family trips, or other expenses. Remaining open-minded will help ensure you don’t get stressed when you have different budgets for different months and can continue to meet your financial needs.
Don’t be afraid to modify your budget each month, and don’t think you’ll always have the same amount in each category every month. Be realistic, but also be flexible.
5. Use an app or website
There are a number of free apps and websites you can use to help create and stick to a budget, track your spending and savings, and even remember when to pay bills. These tools make it easy to see in real-time what you’re spending and saving. Some even integrate with your bank account and credit card and automatically update when you speed and save.
By keeping track of your finances this way, you may be more motivated to stay on track. Plus, you can share the information with your family so you all can track and be updated together.
6. Be realistic
When setting a budget or savings goals, it’s important to be specific, measurable, attainable, realistic, and time-bound (remember: SMART goals). Don’t set “save $20,000 for a down-payment on a house” as a goal. Instead, determine small, incremental goals and focus your efforts on reaching one goal at a time. For example, “save $3,000 in the next six months by cutting back on going to restaurants and bars and using coupons when grocery shopping.”
If you set a big goal right off the bat, you may get overwhelmed and you’re more likely to give up. And, having a variety of goals means you’ll only make small progress on each one. Focus on one realistic goal at a time, and you’ll find you’ll make progress much quicker and easier.