Budget Tips: Tips for Living on a Budget

Budget Tips: Tips for Living on a Budget

Money is an inescapable part of our daily lives. We use it to pay for services and outings as well as buying things that make our lives more enjoyable, convenient, and comfortable. However, managing our money is not always easy. You might tend to go overboard with your shopping or fail to set aside money for essential expenses. These habits could eventually lead to more debt and financial chaos.

In order to sort out your finances and prioritize the things that really matter to you, you need a budget. But what if you already have a budget and you’re having trouble sticking to it? We’ve got you covered with these important tips for living on a budget.

General Rules for Sticking to Your Budget

Your budget can fail for several reasons and it is very important to correct it immediately to put your finances back on track.

Re-evaluate your Budget

If you’re constantly trying to squeeze expenses into your budget or find yourself overspending, it’s likely that your budget is not really working for you. Perhaps your budget is too loose or too restrictive or your budget wasn’t properly planned to meet the reality of your cash flow and financial goals.

A budget is a personal money management tool and you don’t have to copy someone else’s budget in order to manage your finances.

You should have a budget that works for your own financial situation. Furthermore, your budget needs to be adjusted if your circumstances change. It’s likely that your spending will be very different than when you were single if you get married. You may also have to modify your budget accordingly as your income increases/decreases, your family grows, if you have certain health concerns, and as your financial goals change.

Do Regular Pulse Checks

Another important tip for living on a budget is to do regular check ups to makes sure you’re on track. You might want to do a quick a weekly, bi-weekly, or monthly audit of your budget to see if everything is going according to plan.

Checking in on your budget also allows you to see your current financial standing and do quick adjustments as needed. Perhaps you spent too much on wine and steak this week so it’s best to stay away from shopping for a while in order to stick with your budget. Maybe you have a bill due and cancelling your spa appointment will help free up some money. Regularly seeing where you are on your budget will help increase saving potential and allow you to conduct adjustments to prevent financial mishaps from getting out of control.

Write Your Budget Down

You might have a great budget in your mind, but it can easily slip away if it’s not written down. Whether it’s on an actual piece of paper or in a spreadsheet, the visual form of your budget provides a more realistic sense of things and the more you see it, the more likely you are to follow it.

Write down your budget on your financial journal, stick it to fridge or your laptop, or have one inside your wallet. It’s also great to have your budget handy by keeping a copy on your smartphone.

Track All of Your Expenses

How many times have you wondered where your paycheck went? Do you have a solid idea of how much you spend on shopping, coffee, and impulse buys? Tracking your expenses is a close relative to budgeting.

Keep your receipts, get a copy of your bank statements, and write down every single thing you purchased this week/month. By the time you’re having your regularly budget check up, it’ll be easier to know how much you spent on each item. If it seems like you’re overspending, you can easily determine areas that you can cut back on.

Get Your Spouse / Family Onboard

It’s a different story if you’re budgeting for a family rather than just yourself. Your needs and preferences may not always be the same, but if you manage your finances as a household, everyone needs to be on board with the budget.

Get a budget sharing app for you and your family’s smartphones and inform the kids of the budget when shopping for toys or buying food. This way, every member of the family becomes more conscious of their spending. Also, regularly conduct budget and financial meetings with the family to help ensure that everyone is being careful with money.

Use Credit Sparingly

In this age of plastic money, it may seem that cash has become obsolete. The truth is, businesses still accept cash and it’s better for sticking to your budgeting goals.

As your paycheck comes in, withdraw the amount that you’ll need for daily expenses for the next two weeks. Instead of swiping your credit card, pay cash for your gas, groceries, meals, coffee, and movies. This will give you a real sense of how much you’re spending and let you really think about the purchase you’re making than when using a credit card.

When you don’t have the money to pay for a certain item, it’s easier to not buy it until you get the funds. This is also a mental motivator to help you stick to your budget.

Make Your Budget Flexible

The rigidity of your budget may make you feel very deprived, leading you to binge-spend when you get the chance. Make some wiggle room for impulse purchases so you don’t feel guilty about shattering the totality of your budget.

Perhaps assigning $10 or $20 for “fun money” will make you feel better about your finances even when you’re on a budget. You can use this fund for just about anything that catches your fancy (within the price, of course) and feel that you’re enjoying your hard-earned money. A realistic but flexible budget will help you strike a balance in your finances.

Trim the Fat

Ideally, your budget should let you to live within your means. Your income must be enough, or more than enough, to meet your needs.

No matter how much income you have, your expenses must be kept reasonably within how much you earn. Otherwise, you will end up in debt.

In case your expenses are overlapping your income, you’ll need to make some cuts. Perhaps you could skip this year’s vacation to free up additional money for your mortgage. Maybe you’d like to pay off a huge chunk of your student loans. You’ll probably need to adjust your entertainment budget.

When trimming the fat from your budget, begin with the wants and luxuries first. If you’re still unable to meet your most important expenses, you may need aggressively tighten your belt and trim the cost of some of your basic needs (downsize to a smaller house, for example) to stick to your budget.

Keep Your Emotions in Check

There’s this thing people call “retail therapy.” It’s the urge to spend money when you’re sad, depressed, or stressed out.

You compensate these negative feelings with the short-lived feeling of happy escapism when shopping. You could spend more than you intended or spend more than you can afford. If you’re feeling the urge to spend when you’re feeling down, hide your credit card and take a stroll at the park instead. There are many ways to keep yourself entertained without breaking the bank.

Sticking to Your Budget While Grocery Shopping

Think of the grocery as how a little kid would look at a candy store. You simply have too many choices! It can be tempting to just run the tab, fill your cart, and grab whatever that catches your fancy. But having a budget will allow you to prioritize the items that you need or want to buy.

Here are top ways to make grocery shopping a pleasing and practical affair for you and your budget.

Check What You Need Before Leaving the House

It might be the time of the week or month to do your grocery shopping. Before you grab your car keys and purse, you need to make two stops first: your pantry and your fridge. You might need less than you think you do and if you buy all the staples, you could overspend.

The point is: you could buy items at the grocery that you may still have at home. You could have saved more on your grocery budget if you get just what you need. What’s the point of buying another jar of paprika when you still have two left, and you barely even use it? Take note of the items that you still have and what you need to buy to make sure you go through the grocery aisles purposefully.

Make (and Bring) a List

Keep a list pinned into your fridge’s door to know what you’re are running out of before you hit the store. Bring the list when shopping for groceries. Recalling from memory may work, but it can also fail. You could end up forgetting to buy certain items or duplicating the ones you already have at home. It’s also good to have a digital list on your smartphone for easy reference.

Play Upbeat Music with Your Earbuds In

Slow songs played at the store could cause you to spend 29% than you initially planned. Slow music entices shoppers to move at a slower pace which gives them extra time to inspect items they did not plan on buying in the first place. Play an upbeat playlist on your smartphone and plug your earphones on. Moving with a faster music will help you finish shopping faster and avoid the urges of impulse buying.

Stay on a Regular Schedule

According to Kimberly Danger, the author of Instant Bargains, you need to shop two times a month at most and re-visit the store once a week for perishables. Unplanned store trips are the cause of to up to 29% of impulse buying. On the other hand, if you plan and commit to a schedule, you are likely able to reduce impulse buying by 13%.

Use Coupons Wisely

Coupons have a way of telling you that you’re about to get a “good deal.” Coupons don’t really make purchases free. So if you intend to coupons, be sure to use them on things that are really important and necessary for you. There’s no point thinking you’ll get a good deal on items that you won’t use anyway. It will only be a sure way to waste money and stray from your budget.

Shop Sales Carefully

Sales are another way to make you think you’re getting a good deal. It’s the same thing with coupons, don’t shop sales unless you’re going to use the product. If you have the extra money to spend, it would be great shopping on non-perishables that are on sale. Stock of “on sale” items that would make great gifts for birthdays and Christmas. But all in all, you want use caution when shopping sales or using coupons.

Know Your Aisles

The outside aisles of the store are generally garbed in bright and vibrant colors. It’s a strategy that trick you into buying more – and the things might not even be on your list! Go straight to the middle aisles where products are commonly composed of canned and boxed goods and shop the store with a sense of purpose.

Retail vs. Bulk – Do the Math

We are often led to believe that buying in bulk will save you money. But items in the produce section will need to be given more attention as far as calculating prices go. It’s often easier and less expensive to buy per piece of produce because you get to inspect the product more closely vs. buying in bulk.

Compare Stores and Prices Before you Shop

Some products may be cheaper or discounted in one store while others could be more expensive. If you are going to compare prices store to store, you also need to factor in the cost of your commute. You might believe to save more on the item itself, but you also tend to spend more on gas.

Sticking to Your Food Budget

According to the Bureau of Labor Statistics, food takes up the largest expense in US households. A four-member family could spend $568 – 1,293 a month depending on how liberal the budget is. With that said, your food budget could simply blow out of proportion if you don’t stay committed to it. Here are the top ways to stay within your food budget without depriving your family of proper nutrition.

Plan Your Meals

Instead of planning your meals in advance by what you want to eat, do the planning based on what’s on sale. According to the Cut Your Grocery Bill in Half with America’s Cheapest Family co-author, Steve Economides, “Look first at the deals and plan your meals around what’s on sale. This way, you can get meals for half price.”

Cook the Week’s Meals Over the Weekend

Making lunch for the whole family can be time-consuming. Spend Sundays batch-cooking for the next week’s lunch; freeze them and simply heat in the morning before putting into the brown bag. Bringing you own lunch at work also helps eliminate expensive food choices at the cafeteria and restaurants while ensuring that get to eat a lovely and healthy lunch at work.

Save Your Leftovers

It’s estimated that around 25% of food purchases end up being wasted in American households.

To save money and not go overboard your next week’s food budget, turn your leftovers into the next day’s meals or snacks. Leftover meat could turn into the next day’s pizza toppings while shredded chicken could be great ingredient in stir-fry vegetable and soup. Even leftover juices could be frozen and turned into popsicles your kids will love.

You don’t always have to throw every morsel of freshly-cooked food that wasn’t eaten immediately. Use apps like Supercook and BigOven to discover the amazing new dishes that can be made with your leftovers.

Use the Items in Your Pantry

Much like consuming last night’s leftover, it’s always worth peeking into your pantry to see what needs to be used before it expires. The National Resources Defense Council says that, “American households typically throw 25% of their groceries because they don’t get consumed before expiration.” Sort through your pantry and fridge weekly, look at the expiration dates, and use those products for the week’s meals.

Substitute Cheaper Alternatives for High-cost Food Items

Some food items can make a huge dent into your food budget, such as expensive meat cuts and ground beef. You can free up some extra dollars by opting for cheaper alternatives like tofu for meat and ground turkey instead of ground beef. It’s also the same for most food staples like sugar, cereals, and flour. They are likely to taste the same, but generic versions will always be cheaper.

Buy Big Cuts of Meat and Use it in Multiple Dishes

There are lots of wonderful things that you can do with a whole chicken. Buy rotisserie chicken for around $5 and make numerous meals out from it. You can shred off meat and place them into stews and casseroles. The bones would be great for homemade chicken stock and any leftover meat could be used as fillings for sandwiches and tacos. As for pork or beef, 5 pounds could make three dinners: one for hamburger, one for chili and the last one for a chili mac. Just be creative with your meal-planning and a large cut of meat will go a long way.

Grow Your Own Herbs

If you live in an urban area, you don’t even need a wide yard to grow herbs. Potted herbs on the window sill will provide you steady supply of fresh herbs the whole year round. A bundle of herb would typically cost you around $2 but you only need to invest $5 for potted herbs that you can easily have access to any time of the day.

Buy What’s in Season

You get a whooping savings of between 30-50% buying in season produce. The local farmer’s market is a great venue to catch in season produce. Buy a surplus of these produce and can/freeze/bag them so you’ll have supplies for cheap for the months to come.

If you like smoothies, buy berries in season because they tend to be a lot cheaper than fresh ones. You can also buy snap peas, broccoli, green beans, and cauliflowers in season and freeze them. You’ll simply have to thaw them when needed.

Sticking to Your Entertainment Budget

Whether your family is mostly adults or dominated by a posse of children, entertainment costs can easily wreak havoc to your budget. Still, entertainment allows you to have some fun despite how hard life can be. Entertainment doesn’t have to be expensive though.

Opt for Cheaper Movie Sources

The cinemas can drain your entertainment funds fast. A whole family with four to five members could easily spend around $50 on a movie, not counting expensive snacks and drinks. To do movies cheaply, get a rental DVD or simply use Netflix. You won’t be able to see movies right as they come out, but if you’re looking into entertainment with the family without breaking the bank, these cheaper movie alternatives should do the trick.

Go on Picnics

Many families still count dining out as a form of entertainment, but meals at restaurant tend to be more expensive than homemade ones. You’ll also have to pay extra for the ambiance and service. With some effort, you can prepare a simple picnic in your own yard or the nearest park and still have a boatload of fun.

Visit Museums and Libraries

Libraries typically provide free admission while you only have to pay minimum amount to visit museums. If you and your family are looking to pass the time, you can easily find yourselves immersed with the amount of art and literature at these places without the steep prices.

Watch Local Sporting Events

Admission to professional sporting events like baseball, basketball, and wrestling have premium prices and can easily mess up your entertainment budget. Drive to the nearest community or high school sporting event instead to save several dollars on tickets. Watching professional sports can be incredibly expensive so opting for the local version will save you some money.

Play Board Games

Board games are cheap, educational, and entertaining devices that will keep your kids occupied for several hours. Monopoly is one great way to subtly teach kids about finance. Other classic board games will also help kids pass the time in a fun way.

Plant a Garden

Planting in the garden is a refreshing experience and it will teach kids to respect the environment. You can plant fruits, vegetables, and herbs and give the kids the opportunity to actually see their plants grow.

Relax at the Beach

The beach is a surefire way to get the kids excited and entertained without bleeding money from your wallet. Simply load in their favorite toys and let them make castles in the sand. You can watch them nearby and you can have some time for yourself as well.

Sticking to Your Transportation and Travel Budget

If you’re driving a car to your workplace, gas costs and other transportation logistics could easily mess your budget up. Here’s how to save on gas and travel without straining your budget.

Walk Whenever You Can

Your car can take you to most places, but if they’re in walking distance, there’s no need to rev your engine. You can walk to school, church, the local coffee shop, and other establishments if they’re within reasonable distance. The exercise will be good for your health too.

Ride Your Bike to Work

Your bike can get you to work and it is also easier to move through traffic. Biking is also a great workout while saving you the cost of the gas at the pump.

Don’t Drive Like a Maniac

If you do need to drive your car to somewhere, you have keep practicality in mind. Slowing down as you approach a red light and slowly driving away from the green light will help you save between 27 – 35% on gas, depending on your car model, according the test conducted by Edmunds.com.

Buy Gas at the Pump at the Right Time

According to the CEO of Breitling Oil and Gas, Chris Faulkner, Tuesdays and Wednesdays before 10 am are the perfect days to buy gas at the pump. Gas prices at the pump typically rise on Thursday after 10am in anticipation for the busier weekend driving. Also anticipate rise in gas prices a few days just before the holidays.

What to Avoid When You’re Living on a Budget

Budgeting is very essential in helping you realize your financial goals, whether you want to save for big-ticket expenses like a new home, paying off debts, or preparing for your future. But having a budget is simply not enough if you can’t be faithful to it. You need to be disciplined and committed to your budget in order to stick to it.

You will encounter some setbacks and challenges while trying to stick to your budget. These are what you should avoid in order to make budgeting a success.

Keeping up with the Joneses

The Joneses are your neighbors next door who own a shiny new car every year. She’s the woman at work who’s always garbed in branded and expensive dresses. He’s the guy who owns an expensive watch and constantly travels. Basically, the Joneses are the people who you compare yourself financially with.

Comparing yourself with the Joneses is not healthy because you will always feel inferior to them. You could get tempted to spend your money as well and go out of your budget. But what you don’t know is that the Joneses have thousands of dollars in debt to their name just to sustain their lifestyle.

Being Unprepared of the Unexpected

Being on a budget doesn’t mean you should only allocate for expected expenses: rent, education, healthcare, utilities, insurances etc. Life can surprise you in unexpected ways and you could mess up your budget by not anticipating them.

Personal finance expert Dave Ramsey suggests that you should have at least $1,000 in emergency fund at all times. You can use this fund any time an emergency strikes so you will not have to use the funds you were planning on using elsewhere. Grow these funds as soon as you can free up more extra money (say when you’ve cleared a debt or got a raise). This will give you a good layer of immediate protection and coverage should life throw you a curveball.

Giving up on Your Budget Altogether

Some people mess up their budget from time to time. A glaring sale sign, an invitation for a luxurious weekend getaway, or a moment of stress could lead you to spend more than you intend to and in most cases, you will feel regret at the last moment.

Don’t swear off your budget when you make mistakes and just keep trying to stick to it. You have to determine your weaknesses and forgive yourself for giving in to it. What’s important is that you always try to get yourself back on track despite falling off the wagon.

Bottom Line

Setting a budget is only half of the battle, but it will always be more difficult to stick to it. It will not always be easy to remain faithful to your budget and not be tempted by certain things, but the effort will be worth it. Being committed to your budget also means you are committed to your financial goals and that you are willing to a sacrifice a few things right now to attain a better financial footing in the future.

SOURCES
http://www.investopedia.com/financial-edge/1011/how-to-make-yourself-stick-to-your-budget.aspx
http://money.usnews.com/money/personal-finance/articles/2015/06/16/12-ideas-to-help-you-stick-to-your-budget
http://www.bankrate.com/finance/personal-finance/7-ways-to-save-money-on-groceries-1.aspx
http://www.theguardian.com/lifeandstyle/2016/jan/30/where-to-shop-cheaply-cook-budget
http://www.edmunds.com/fuel-economy/we-test-the-tips.html