Easy Tips to Keep Your Budget on Track
To make the most of your hard-earned money, you can’t turn a blind eye to your spending habits — knowing where your money goes, determining which expenses are necessary and adjusting your spending can save you money.
We’ve gathered some helpful tips to consider when getting back on the road to financial freedom.
Evaluate Your Current Spending Habits
You can’t turn the page on your old financial habits if you don’t acknowledge, analyze and figure out how to improve them, so face the music and grab your most recent bank statement.
Find outliers. Are there some big out-of-the-ordinary expenditures on your statement? If they’re medical bills or necessary home improvements (say your air conditioner needed to be replaced in the middle of July), that’s understandable. But multiple expensive restaurant or online shopping purchases is cause for concern. Take note and work to curb those big expenses.
Identify the repetitive small charges. Even though that $2 small coffee seems like a pretty cheap way to get your mind in gear for the workday, it adds up quickly. So does that mid-morning bagel and afternoon energy drink. Many of these mini expenses tend to be food- or drink-related, so consider brewing your own coffee and bringing food from home to satisfy your cravings.
Calculate the carry-over. If you’re spending your entire paycheck every two weeks, you’re treading water and failing to set yourself up for future financial success. If you’re not taking some of your earnings and putting them into a savings account every pay period, you should at least see your checking account increase in value over the course of a few paychecks.
Set Short- and Long-term Financial Goals
Saving money and obtaining good financial health is a heck of a lot easier when you’re working towards specific, attainable goals. Keep these tips in mind whether you want to pay off your credit cards in six months or plan on taking your family on a tropical vacation for the holidays.
Be realistic. Your thousands of dollars in student loan debt isn’t going to just disappear in three months — you’ve got other expenses to care of, after all — so set a realistic timeframe for accomplishing your long-term and more-expensive goals.
Differentiate your needs from your wants. Saving up for a new sportscar sounds like a lot more fun than paying for a new furnace, but when it comes to keeping your family safe and in sound financial health, the choice between the two is obvious. When setting goals, make sure to identify whether the goal is a need or a want and consider your current status when choosing which to save for.
Prioritize your goals. After differentiating your needs from your wants, prioritize the goals you settled on. You can save to pay off your credit cards and take your family on that vacation at the same time, sure, but ranking your goals in terms of importance can make a big difference should you have a savings hiccup halfway through the process.
Track your progress. Whipping your finances into shape and accomplishing financial goals isn’t a set-it-and-forget-it kind project — it takes a lot of tracking and adjusting. Noticing that you’re off track in week one is much better than noticing it in week nine, so carefully monitor your bank account or utilize an online money management and budget-tracking service.
Many services let you connect your bank accounts, credit cards, bills and investment accounts to paint a clear picture of your finances in one convenient place, making it easier than ever to create a budget and stick to it.
Make It Personal and Have Fun
Tracking your spending and cutting back on spending can seem like a chore, but it’s all in the name of making your family’s life better. Try utilizing some of these tips into the way you budget to save money and have a little fun at the same time.
Give yourself some wiggle room. Budgeting doesn’t mean cutting every single coffee, movie and take-out order from your life. Set a limit for the amount you can spend on those things, though, and plan out a particular time when you can enjoy a night out. Try out some of these tips for creating a monthly budget.
Reward yourself. While you’re tracking your progress towards your short or long-term financial goals, set checkpoints for your progress and reward yourself when you reach them. What’s the fun in budgeting if you can’t celebrate your successes?
Make it a family activity. Facing off with your family to see who can meet their goals or save the most every month can spur some seriously competitive savings! If you have young children, you’ll also be setting them up to practice good money habits later on in life. And who wouldn’t be careful spending their allowance when the prize is ice cream?
When you’re saving your hard-earned money, get in touch with your American Family Insurance agent to make sure your insurance policies will be there to back you up in the event of the unexpected. Happy budgeting!