4 Easy Tips for a Budget Do-Over
4 Easy Tips for a Budget Do-Over
Sometimes, we just need a do-over in life… dieting, breaking bad habits, and of course budgeting are areas we can always start again with a new passion for success! We have all been there… that moment when you realize you have overspent, again. How do you reset your spending habits? Check out our top 4 tips for your budget do-over.
- Plan out EVERY dollar – Do you have a plan for your money? Do you know where every dollar is going each month? By creating a budget, you can easily identify where you may be overspending. You want to start your budget with the non-negotiable items. These are expenses you have every month – Mortgage, car payment, food allowance, daycare, gas, ect… If possible, you should try to budget 10% of your income to a designated savings account. If you don’t have enough to do 10%, start with the most you can manage. Even if it is only 1% or 2% of your income. Having a savings account will help when emergency situations arise. The rest of your income should be divided into your discretionary spending accounts. This is where you put the “extras”- Date nights/ eating out/ shopping/ extracurricular activities. Check out our money management partner, Balance, for even more tips on budgeting. Balance
- Live within your means – Okay friends… it’s hard truth time. Are you living within your means OR are you spending more money than you make? As much as we may all really want to buy the new Bugatti Veyron, priced at a cool $2 Mil, there are not many of us who have the income to validate that purchase. Your budget is truly all about give and take. If there is something that you highly value and want to spend more money on (such as real estate), then you may need to tighten up other areas in your budget (like extra spending, cable TV, and other monthly entertainment). If you are looking to reset your spending habits, check out the Spending Freeze Challenge. During a spending freeze challenge, you stop ALL extra spending outside of the non-negotiable expenses. There is no extra eating out, no extra date nights and no extra stops at Target on the way home from work. Although it may sound awful, it actually gives you a break from spending and allows you to save money and reset your spending habits. Check out our attempt at the Spending Freeze Challenge here. Financial Challenge Series
- Create a Savings Plan – How do you pay for the really BIG extra’s in life? The trips to Disney World, kitchen remodels and your dream Mediterranean Cruise are all large expenses that don’t always fit into the monthly budget. We recommend creating a savings plan. Do your research and find out exactly how much these items will cost. Then you can create a plan of attack to save for these extras! One of our members shared how her family creates a “Savings Floor”. This is the amount of money in savings they refuse to go below. Once they have reached their goal or savings floor, the rest of the money allocated to savings can go toward their extras. She is currently saving to remodel her kitchen. They typically save around $800 per month. Her kitchen remodel will cost $5000. She has already reached her savings floor ($5,000 in her savings account that is for emergencies) and will continue to save the $800 each month toward the kitchen remodel. She will be able to remodel her kitchen in a little over 6 months.
- Update and Review your budget on a quarterly basis – Life is constantly changing… which means your budget will need to change too! Are you planning to watch the new season of Game of Thrones? Plan your budget accordingly to include your HBO subscription. Did your son just start Kindergarten? It’s time to reallocate the money set aside for pre-school. It’s a good idea to go in and adjust your budget quarterly to coincide with changes in your life.
Bottom line… there is no shame in starting again. Take the time to reset your spending habits in order to see financial success. And remember, we are always here to help! Contact our expert loan officers to discuss how to manage your money, pay off debt and save for your goals. Contact Us