It’s the dreaded "B" word—budgeting.
Unfortunately, the word budget has gotten a bad rap. When it all boils down, a budget is basically just a plan for your money. Budgeting means you’re spending with purpose before the month begins. But many people view a budget as a straitjacket that will keep them from doing what they want.
But that couldn’t be further from the truth! A budget doesn’t limit your freedom, it gives you freedom! It’s really all about being intentional with where your money goes.
As some of you may know, I am a fan of Dave Ramsey. He's helped more people financially than anyone I know and he is great at it. Some of the tips below are inspired by Dave and I have to tell you that they work! I have used them myself to get out of debt.
How Can Budgeting Help?
A budget is going to give you an action plan and clear picture of where your money is ending up each month. Budgeting will help you achieve the goals you’re working toward—whether that’s getting out of debt, saving for retirement, or just trying to keep your grocery bill from getting out of hand.
When you see planning a budget as simply spending your money intentionally, you can actually find more freedom to spend! Once something has been budgeted for, you’ll be able to spend that money without feeling guilty. Many people even say they find "extra" money after they create a realistic budget and stick with it. How amazing is that?
Here are top 10 practical budgeting tips to do today.
1. Budget to zero before the month begins.
This means before the month even starts, you’re making a plan and giving every dollar a name. It’s called a zero-based budget. Now that doesn’t mean you have zero dollars in your bank account. It just means your income minus all your expenses (outgo) equals zero.
2. Do the budget together.
If you’re married, you and your spouse need to sit down and get on the same page about money. Remember: If the two of you are one, your bank accounts should be one too! It’s no longer your money or my money—it’s our money.
And if you’re single, find someone who can act as your accountability partner and help you stick to your goals!
3. Every month is different.
Some months you’ll have to budget for things like back-to-school supplies or routine car maintenance. Other months you’ll be saving for things like vacations, birthdays and holidays. Regardless of the occasion, make sure you prepare for those expenses in the budget. Don’t let these special occasions sneak up on you. (Hint: Christmas is in December again this year, guys!)
Be sure to adjust your budget each month as things change. Make a savings fund you can stash cash in throughout the year. When you don’t have a plan, you’re going to be stressed. And that takes all the fun out of giving and celebrating. No one wants that!
4. Start with the most important categories first.
Giving and saving are at the top of the list, and then comes the essentials—food, shelter and utilities, basic clothing and transportation. Once your true necessities are taken care of, you can fill in the rest of the categories in your budget.
5. Pay off your debt.
If you have debt, paying it off needs to be a top priority. Use the debt snowball method and the Baby Steps to get rid of debt as fast as you can. Attack it! Get mad at it! Stop letting debt rob you of the very thing that helps you win with money—your income.
6. Don’t be afraid to trim the budget.
Brace yourself! It might be time for some budget cuts in your life. If things are tight right now, you can save money quickly by canceling your cable, dining out less, and shopping at discount clothing and grocery stores. Remember, your budget cuts are only temporary. You can always make adjustments later down the road.
7. Make a schedule (and stick to it).
While you’re making a budget part of your monthly routine, why not pick specific dates for other expenses? Set up auto drafts out of your checking account to pay bills, and buy your groceries on a set day every week or twice a month. When you know what to expect and when to expect it, you take a lot of stress and potential pitfalls out of the picture.
8. Make it a team effort.
If you’re married, it’s important to talk to your spouse about money—especially the budget. A big part of marriage is creating a life you love together; money is simply a tool to help you realize those dreams.
Sit down once a month and have a budget date night. Make it fun! Grab some of your favorite snacks and put on a good playlist to help you focus. The important thing here is that you’re both on the same page. And don’t forget to celebrate the small wins together. Look back at your earlier budgets and see how far you’ve come. I bet you’re spending significantly less on groceries.
9. Create a buffer in your budget.
Put a small amount of money aside for unexpected expenses throughout the month. Label this as your miscellaneous category in your budget. That way when something comes up, you can cover it without taking away money you’ve already put somewhere else. Keep track of expenses that frequently end up in this category. Eventually, you might even want to promote them to a permanent spot on the budget roster.
10. Be content and quit the comparisons.
You have much more than you realize. Don’t compare your situation to anyone else’s. Comparison will not only rob you of your joy but also your paycheck. Keep moving forward and doing what’s right for your family.
When you realize the purpose of budgeting isn’t to limit your freedom but to give you freedom, you’ll be on the road to loving your life and your bank account! That’s what we call winning with money.
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