Budgeting sounds pretty simple, doesn’t it? The concept itself is pretty straightforward: You decide what you want to spend on different things each month, then you stick to the plan. But developing and maintaining a budget is far more challenging in practice. Check out Daily Prosper to learn more on how to manage your money
That’s because life is unpredictable, willpower can be difficult to maintain and money can quickly become very abstract – especially when you’re dealing with electronic payments, direct debits, and other “invisible” outgoings.
Of course, all of these considerations come a long way down the list of issues if you’re somebody who often finds they often don’t have enough money to cover basic monthly expenses.
Whatever your financial position may be, budgeting is always wise and worthwhile. For those who are struggling to make ends meet, careful budgeting can minimize losses. For those looking to nurture their savings, a stringent budget can make achieving financial goals much more achievable. Yet very few households have a clear budget in place.
In fact, only 41% of Americans claim to keep a budget, meanwhile, 4.3 million UK households don’t have any savings whatsoever and South Africa’s household savings rate is zero.
5 Budget Boosting Tips
Whatever your reasons for neglecting your household budget, it’s time to get back in the saddle. These budget boosting tips could help you spend smarter this month…
1. Use a Budgeting Template or App
There are lots of helpful apps which will almost automate budgeting for you! Check out packages such as Spendee or 22Seven, if you like to embrace technology. Although apps are an easy way to crunch numbers, they’re not the right option for everybody.
If you want to really think about your finances and get “hands-on” with your outgoings and income, a personal budget template is often helpful (click here for a free one). This approach forces you to really look at your money and act.
Most templates of this type will ask you to break down your outgoings into categories including housing, food, transport, healthcare, education, etc. so you can see exactly where you are spending, and where you can afford to cut back.
2. Try the Envelope Method
The envelope method is a surprisingly simple technique that can help you maintain willpower if you find yourself consistently overshooting your budget in specific areas.
Once you have developed your budget, simply put the amount you can spend on problem categories (i.e. Food or entertainment) in an envelope in cash (make sure to leave it somewhere secure).
With your money in physical form, it will be much more difficult to overspend and you will likely find yourself spending more cautiously. If you’re nervous about carrying cash from a security perspective, you can repurpose this approach using prepaid cards.
3. Become a Frugal Foodie
If you’ve used a budgeting app or personal budget template, you might be surprised by how much you spend on food. Take a week to challenge yourself to see how little you can spend on food. Learning a few at-home cookery skills and affordable recipes could transform your food budget for the better.
There are lots of great resources for cooking healthily on a budget out there. Jack Monroe of Cooking on a Bootstrap (also known as “the tin can cook”!) is a much-loved favorite.
4. Delay your Purchases
Putting things off isn’t helpful when it comes to your bills, but for non-essential purchases, a bit of procrastination could save you a lot of money. If you feel tempted to buy an item of clothing, a kitchen appliance, or a piece of technology, put yourself on pause.
Tell yourself to wait until next week. Putting non-essential purchases off can really put the brakes on impulse purchases and show you that you don’t “need” such items. Once a week has passed, you may find the urge to buy the item has passed too.
5. Have a “Spend Nothing” Week
Or a spend nothing fortnight, or even a spend nothing month. Whatever challenge you choose to set yourself, see if you can reduce non-essential spending to zero for a period.
During this time, see how much is possible for free! For example, you could take a bike ride with a friend, or visit free museums and galleries. These periods of not spending will be great for both your budget and your creativity.
By discovering new ways to live more and spend less, you’ll be able to make wider changes to your lifestyle and spending habits.