It makes sense that the best way to take control of your finances might feel intimidating at first. If you haven’t reviewed your income and expenditures for a while, you might wonder what lurks inside that monthly statement.
Budgeting is scary and difficult if you don’t review your spending regularly. But you can start small right away with these six budgeting hacks.
1. Work Within Concrete Limits
Using a credit card has its benefits, but helping you control your spending probably isn’t one of them. It’s easy to overspend only to find yourself facing the consequence of a considerable bill weeks later. The first tip for easier budgeting is to put the credit card aside and use a debit card instead. By limiting your spending to what is available in your bank account, you can’t spend more than you have.
Using a debit card instead of a credit card is easy because they are accepted anywhere you use a credit card. With debit cards and checking accounts, you can move money around immediately. Don’t underestimate the power of tighter control over your budget by only spending from the funds available in your checking account.
2. Record Both Income and Spending
You don’t need to make any immediate spending changes to improve your budgeting mentality. All you have to do is develop mindfulness, which is easy to do by recording your financial activity for just three months. You can either look at historical data from your bank or begin tracking from this point forward. Calculate your average income and spending when you have three months of information.
Simply by tracking your income and spending, you may see an immediate change in your spending by paying closer attention. Once you begin meticulously noting where you spend money, you might prioritize your spending differently. Perhaps you allocate more money to eating at home rather than dining out. With more awareness, making changes comes easier.
3. Assign Necessary Funds as Soon as You Get Paid
Another way to develop financial awareness is to set aside enough money for predictable expenses. For example, allocating funds to housing, utilities, and loan payments should occur as soon as your paycheck arrives. You can learn to live on what remains by accounting for the necessities first.
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You can allocate money using a budgeting program, a spreadsheet, or even just a pen and paper. The purpose of this is chiefly psychological — you actively take the potential for overspending away when you’ve accounted for that money. This method requires that you create guidelines and stick to them strictly. It can help not only to save that money, but also to build discipline in your financial habits.
4. Set Up Automatic Savings Deposits
If you have a particular saving goal in mind, you might consider setting up automatic deposits. By setting up automatic transfers through your bank, you can set a plan to fund your savings account and forget about it. Putting money into savings first, as with budgeting for necessities, gives you a clear picture of what remains.
Even if you cannot save much after each paycheck, this method might be your best bet for improving your financial position. If done consistently, your savings account will slowly build over time without your involvement. Just be sure that the amount of the automatic deposit is always feasible and tailor your spending accordingly.
5. Create Account Threshold Alerts
Many account issuers provide customizable alerts. When specific actions take place on your account, you can request to be contacted. For instance, an automated system can send an email or text alert if your savings account goes below a certain amount. These alerts can help you stop yourself from taking too much out of your savings and help you stay true to your savings goals.
Alerts can also tell you if you’ve reached a goal if you set the threshold higher than your balance. Say your savings balance is $500, and you set an alert for $700 — upon hitting the amount, it’ll alert you!
While savings goals are certainly alert-worthy, you might want to look into other possibilities as well. Notifications about potential fraud or unusual spending on your account can be a crucial tool to track your finances.
6. Budget However Is Most Convenient for You
The act of budgeting can take a variety of forms. Don’t give up if you try one method and it doesn’t work for you. Simply try a different tactic.
Budgeting programs help automate much of the process, but they can also overcomplicate things. You might decide to take a look at your spending every day, meticulously noting every cent you’ve spent. Or you might write numbers on a sheet of paper and hang it near your computer to remind you about your spending.
No matter your method, the goal is to get yourself closer to your financial goals. You may find you need something a bit unorthodox, like scribbling pie charts on a whiteboard. If it works for you, do it. No matter how you get to the destination of financial security, you’ll be grateful you did.
While taking a deep dive into your finances can be nerve-wracking, it’s an essential first step toward financial stability. There is nothing you might find that cannot be improved. Your efforts will pay off as you move closer to your financial goals.
