Are you struggling to start or stick to a budget? In this post I reveal the key to a successful budget, plus 5 other helpful budgeting tips.
For many people, budgeting is one of those tasks that gets pushed to the bottom of their financial priority list. In most cases, it’s because they tried it in the past and either found it boring, time consuming, or they just struggled to see the financial benefit. And if you’re one of those people, it’s easy to wonder if you’re doing something wrong.
But here’s the thing, there is no secret sauce when it comes to budgeting. You can’t just snap your fingers and magically turn into a master budgeter. That said, there are things that make the process easier. And that’s exactly why I’m writing this article.
The Key To A Successful Budget
Before we go much further, I want to address the question that probably led you to this post in the first place: what is the key to a successful budget?
Above all else, the key to a successful budget is consistency. Since budgeting is a long-term process, the more consistently you log your expenses, assess your progress toward your financial goals, and look for ways to reduce wasteful spending, the more benefit your budget will have on your financial life.
In other words, creating a budget and sticking to it for a week, or even a month, won’t bring you much, if any, financial success. Rather, you need to live and breath your budget for the rest of your life. (Umm… major commitment alert!)
But let’s be honest, that kind of consistency is easier said than done. Why? Because truthfully, there is no finish line with consistency. The goal is the process itself. So, in essence, as long as you remain consistent, you are continually achieving your goal.
Whoop-dee-doo! I mean, talk about a less-than-satisfying reward for all your budgeting effort.
And without a satisfying reward, it can be tough to maintain enough motivation to keep going. To top it all off, if you think budgeting is boring or difficult, then you are even less likely to be consistent.
But therein lies the solution.
I mean, if the key to budgeting is consistency; and the key to consistency is to make the budgeting process simple, rewarding and enjoyable, then we know exactly what to do.
So, in order to help you improve your consistency (i.e. the key to a successful budget), here are a few simple tips to make the entire budgeting process easier and more rewarding.
Hmm… maybe there is a secret sauce!
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6 Other Tips For A Successful Budget
Track And Celebrate Your Consistency
As we’ve already discussed, one of the hardest things about sticking with your budget is that oftentimes there isn’t a clear reward for your consistency. Sure, staying consistent with your budget may help you achieve your financial goals, but it’s much easier to tie your success to expenses you cut, rather than the fact that you sat down and worked on your budget every night for six straight months. Which, by the way, is the reason you were able to identify the expenses in the first place.
In budgeting it’s easy to get so wrapped up in tracking your expenses and monitoring your progress toward your financial goals, that you forget to acknowledge your consistency.
That’s why you should set a consistency goal for your budget in addition to any of the other financial goals you have set. For example, you could set a goal to log your expenses into your budget every other night for 3 straight months. Then, if you achieve it, you can celebrate it and set a new goal.
Be More Specific
One of the biggest reasons people fail with their budget, or at least don’t find as much success as they were hoping for, is that they are too vague throughout the entire budgeting process.
First of all, they set unspecific goals. For example:
“I want to save more money”
“I want to get out of debt”
“I want to start investing”
Yeah, those are all good things, but they are so incredibly vague. I mean, how much money do you want to save each month? How much debt do you have to pay off, and how long are you going to take to do so? And if you want to start investing, how much are you able to invest out of each paycheck, and where are you going to invest it?
If your goals are vague, you will have a much harder time budgeting. So, be more specific when you set them.
Second of all, if you want to experience the joy of a successful budget, you need to be more specific when you actually plan out your spending. For example, I know there are some people out there that advocate for the 50/30/20 budget, but I think it leaves a lot of room for error.
Instead, you should use the zero-based budgeting method. This method forces you to plan out every dollar of your income each month, which may take a few minutes longer when you’re setting up your budget, but it leaves almost no room for error throughout the month. That way, you can confidently deposit money into savings each month, track your spending progress, and know exactly where you stand with your budget at any point in time.
It might seem a little backwards at first that adding more specificity to your budget would actually make things easier, but trust me, it works.
Save Before You Spend
If you really want to have a successful budget, you need to get in the habit of saving money before you spend it whenever you get paid. Now, this is one of the reasons why that zero-based budget we just discussed is so important.
If you’ve planned out your budget to the penny, then there is no reason you shouldn’t just move the amount of money you budgeted for savings into your savings account the moment you receive your paycheck.
This is known as ‘paying yourself first’, and it is one of the most important habits you can adopt in your financial life.
Side Note: If you want to maximize your savings, it’s important to put your money into an account that earns a solid interest rate. Seriously, if your savings account is earning something like 0.1% each year, you are leaving a bunch of money on the table. That’s why our #1 recommended savings account is the CIT Savings Builder. With its low monthly deposit requirement of only $100, you can earn an interest rate that puts the national average to shame! Beyond that, it only takes $100 to open an account.
Focus On Your Expenses And Your Income
In budgeting, we spend so much time cutting expenses, that we often lose focus on the other end of the spectrum: our income. Now, don’t get me wrong, cutting expenses is a big part of the budgeting process, and if you want to be a successful budgeter, you need to cut as much financial waste as possible. But, if you really want to get the most out of your budget, increasing your income is one of the best ways to do so.
Think of it this way, with a budget, you have complete control of your money. So, if you were to make more money, you would be able to do much more with it.
There is no better time to increase your income than when you are living on a budget. If you do, you’ll be able to maximize every dollar, and add some serious fuel to your financial goals.
Don’t Forget To Have Fun
All too often when people get on a budget, they cut so many expenses and eliminate every ounce of fun in their life that they end up hating their budget. And what’s the point of getting on a budget if you just abandon it after two weeks?
If you really want to have a successful budget and stay consistent, you need to allow yourself to spend some money on fun every once in a while. After all, slow progress is still progress. It’s better to improve a little bit each day than try to fix everything in one fell swoop.
Think of it like this, if you want to lose weight and get in shape, it won’t do you any good to starve yourself for a week and work out 5 hours per day. If that’s the route you take you’ll end up hating it, and probably collapsing on the treadmill before noon on day one. Rather, the better route is to hit the gym for 30 minutes per day and cut your calories by 25%. That’s much more sustainable, and you will get better results.
Spend From One Account
If you really want to up your budgeting game, then you should do everything in your power to simplify the process. And the best way I have found to do that is by spending money from one single account: your checking account.
I personally prefer putting every expense on my debit card, but if you prefer cash, that will work too.
Now, if you are the kind of person that believes every transaction should go on a credit card, this is probably hard for you to hear. But seriously, this is the best thing you can do if you want to improve and simplify your budget.
Think about it, if you only have to log into one bank account in order to track every expense, then it should only take a couple of minutes each time you reconcile your budget. Additionally, every time you spend money, you don’t have to worry about paying it off before you get hit with interest.
Logistically, it is so simple to just spend money from one account. And if you choose to adopt this technique, I can almost guarantee it will lead you to some serious budgeting success.
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- 10 Things To Do With Leftover Budget Money
- How Much Should I Budget For Food?
The key to a successful budget is consistency. But if you want to be more consistent, you need to make the process of budgeting easier and more rewarding. And to do that you need to:
- Be more specific
- Save before you spend
- Focus on your expenses AND your income
- Don’t forget to have fun
- Spend from one account
So, what do you think is the key to a successful budget? Be sure to leave your thoughts in the comments below.
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