15 Budgeting Hacks to Reach Your Goals This Year
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It’s true: Many people hate the B word. I’m talking about BUDGETING.
These days, budgeting is not in style. Most of my friends do not have a budget. Unbelievably, the state of Illinois recently went an entire fiscal year without a budget.
But the unpopular truth is that budgeting is the number one way to make sure that you are on track with money.
I like to think of my budget as a road map. It tells me where to go and how to get to my chosen destination – hopefully as efficiently as possible.
But I am still the one who puts together the map and follows each step. Putting together a road map is easy, and so is making a budget – sticking to a budget can be much harder.
It has been many years since I created my first budget. In September 2009, I got my first real job and was on my own for the first time. Just before the school year started, I accepted a job teaching music, moved from Michigan to Illinois, and found a roommate.
At the time, I had no idea how to manage money. I had just read The Total Money Makeover , but I didn’t know the first thing about budgeting an “adult” paycheck. This was going to be the first time I had ever earned a paycheck which included a comma in the amount field! So I did the responsible thing – I sat down and made the budget you see below.
My first attempt at a budget was OK. I overspent my budget in many categories and spent more than I earned overall. Sound familiar?
15 BUDGETING TIPS FOR EVERYONE
Looking back, I wish someone had sat down with 21 year-old me and showed me how to budget. Figuring it out on my own through trial and error was tough.
Today, my wife and I are on the same page with money thanks to our budget. And if it sounds like an exageration, the truth is it’s not: our budget is one of the most freeing things to ever happen to our marriage!
Whether you’re looking to start your first budget or fine tune your budgeting skills, the following 15 tips will help you make a budget that will work for you!
1. Make a Budget Every Month
Every new month brings new expenses and circumstances, which makes this first budgeting tip the most important: you need to create a new budget every single month.
You can use previous monthly budgets as a template, but your budget needs to be realistic if it is going to help you. For example, your expenses in December (holiday gifts, wrapping paper, decorations, baking ingredients) look completely different than those in July (sun screen, bug spray, Popsickles). Plan ahead for variable expenses and include them in your budget.
2. Manage Housing Costs
For homeowners, housing is likely to be your biggest expense until you pay off your mortgage. If it has been a while since you have considered refinancing, now is a perfect time to consider your options and possibly save hundreds of dollars each month. I recommend you take a few minutes to check out offers with GuideToLenders and LendingTree.
Both processes took me less than 3 minutes to examine refinancing rates. I still haven’t pulled the trigger on refinancing yet because our rate is really good, but if your rate is over 5%, you need to do this NOW.
If you just starting out and are renting, finding a roommate can help you hack away half (or more) of your housing costs from your budget each month. In my case, I avoided spending $1,000 per month for a one-bedroom apartment and spent $400 to rent a home in a two-bedroom condo. By sharing costs I avoided spending 40% of my net income on housing costs.
3. Include All of Your Debt Obligations
When budgeting you may feel the temptation to leave out debt payments, especially if you have student loans in deferment. But avoiding your debts will not make them go away, so gather this information, including total principal, interest rates, minimum payments, and loan terms for each debt.
If you’re not sure how much you owe and to whom, you can find out for FREE thanks to CreditSesame. Or if you’d rather do it the hard way, you can also contact the appropriate customer service departments, if you have their information, to gather loan balances. Once you have a clear picture of your debt, include the monthly minimum payments in your budget.
And a word about credit card debt: If you’re facing high interest rates, you should call to negotiate better rates, especially on credit cards. Be persistent and don’t take no for an answer. You’ll be surprised at the results.
If student loans are eating up a huge chunk of your budget, I can’t stress it enough: it is FREE and easy to check out refi possibilities, and it won’t damage your credit one bit. I don’t have student loans these days, but I recommend connecting with Purefy to gather your options.
4. Cook at home
Preparing your own meals at home will accomplish two goals: you will save money, and you will not gain weight eating low nutrition/high calorie fast food. If you’re willing to learn basic cooking techniques and how to use spices effectively, you can slash your food budget significantly.
And if planning isn’t your strong-suit, $5 Meal Plan will do it for you and send meal plans to your inbox every Friday!
5. Live simply
Do you remember college life? When I was in college, I appreciated a coffee and bagel just as much as I do a steak dinner today. If you strive to live simply and manage your expectations, budgeting will be much easier.
If you’ve already made a habit of living it up every weekend, start by taking baby steps to scale back your lifestyle. You’ll be surprised how quickly you start to find happiness in the little things.
6. Don’t lease or carry a car payment
When it comes to cars, the key is to make sure pride doesn’t influence your decisions. If your current vehicle gets you from point A to B, it’s a keeper, especially if you own it outright.
Related: Your Car Lease Is Killing You
7. Brew Your Own Coffee (and Get a Pot With a Timer)
In general, the small things like coffee won’t ruin your budget. So by all means, enjoy the occasional coffee without guilt. But if you’re in the habit of buying a $5 mocha every morning, it’s time to pump the brakes and make your own coffee.
I learned this the hard way when at the end of my first budgeted month I had spent $80.77 on coffee on my way to work. I had a decent Mr. Coffee Coffeemaker, but it didn’t have a timer feature. If I happened to be running late to work in the morning, I resorted to a quick Starbucks stop, which cost me significant money without contributing to my happiness or nutrition.
8. Stay in
I get it: many people, especially singles, will feel the temptation to go out night after night. This habit will kill your budget.
Instead, invite friends or your significant other back to your place, where food and drinks are cheap and Netflix is nearly free.
9. Take Advantage of Groupon and Restaurant.com
I’m not even sure if Groupon and Restaurant.com existed when I made my first budget, but taking advantage of them today is a key part of our dining out experience. With either platform, you can purchase certificates for what is usually a fraction of the value, which allows you to realize significant savings and still enjoy a night out. The most common Restaurant.com offer is $10 for a $25 gift certificate.
10. Build an emergency fund as quickly as possible
When your budget cannot handle unexpected expenses, a strong emergency fund will ensure you don’t have to swipe your credit card. Whenever possible, include contributions to your emergency fund in your budget.
They will add up every month more quickly than you think!
Related: 5 Tips to Save $1,000 Fast
11. Give Money
I have always given 10% to charity and missions organizations, but I know this isn’t for everyone.
If you’re not a natural giver, start small. Even $10 per month will benefit worthwhile organizations, and the act of giving will be freeing. You will learn to value the money you have and appreciate the little things.
12. Get an Accountability Partner
Finding a friend to help you with budgeting can be eye-opening. He or she may find solutions or wasted money that you missed. And sharing with another person can help you stick to your budget.
A little shame is a powerful thing.
13. Budget In The Fun Stuff
If you only budget for required expenses, you will quickly grow to hate your budget. Plan for fun expenses when budgeting to avoid budget burnout and create a budget that you can live with each month.
14. Budget Based on Your Values
Your budget should align with what matters most to you!. In other words, your budget should be a reflection of your priorities.
Someone who barely knows you should be able to look at your budget and determine what is important to you. If they can’t do this, your budget needs work.
Related: Building a Values-Based Budget
15. No Shame
I’m giving you permission: It is OK to explain to people that you are on a budget. In fact, if you keep it a secret, it will be more difficult to stick to your budget.
Be honest with friends about how you’re using a budget to get control of your life. It will be less awkward if you explain before you are invited out for drinks and dinner every weekend. And it will make it that much easier to say no.
It won’t always be simple, but budgeting will keep you on track to take back your life and your money. At first, budgeting may feel restrictive, but remember – you are in charge.
Your budget is only a road map for your money, and you are the one who charts the course. Use these 15 budgeting hacks to improve your own budget today!
Readers, what budgeting tips help you stay on track?