Greetings, Fruclastic friends! Today we have a guest post from Tina, who blogs over at Pro Finance Blog. Enjoy!
Making a budget is less difficult when compared with sticking to the budget. You may have read plenty of articles on the web titled “Simple Tips to Make a Budget,” but how many have you read on ways to stick to your budget? Very few I guess.
Well, in this article I’ll give you some tips, which will help you go on a course with your budget.
How to Stick to a Budget
Set some goals
Promise yourself you’d stop spending the moment the expenditure goes past a certain amount. Alongside, be determined to do better each time. Don’t revolve around one area to cut back on your spending, instead, play musical chair with all areas, through which money goes out.
Let’s say you have the habit of eating out on every weekend. Stop eating in the restaurants for a whole month; it’ll save you money. The next month, go back to your previous eating out routine, but don’t watch movies at the theatres.
The goals should be realistic, in other words, the saving target shouldn’t be huge. If you don’t save much, then $60 a month should be your saving target. But if you are already saving, make it $40 a week. Unrealistic goals deflect people from sticking with their budgets. Setting realistic goals helps you achieve them.
Don’t get duped
You think it’s not in your hand. Trust me it’s in your hand. Retailers use their best weapons to lure consumers and dupe them, and all the while, consumers remain completely oblivious to the fact that they are getting duped. Not to forget online scammers, who know various ways to dupe consumers.
Credit card companies are hand in glove with advertisers. Your credit card provider might suddenly offer you a 10% discount on any purchase from a particular brand. Don’t feel overwhelmed; ask yourself whether you seriously need the product. If the answer is negative, then don’t go for it even if the discount is 100%.
There are red flags, watch out for them if you don’t want to get duped. Such red flags are:
- “Offer limited for X period” captions.
- Original price mentioned is difficult to verify.
- Product price ending with nine. $199 instead of $200 even though there’s hardly any difference.
- Low cost being highlighted, not the product.
It’s disappointing that most consumers are not aware of the tricks, pulled by the retailers. The smoke released from the advertisement bong pipe clouds their judgment. They don’t give two hoots about the $20 shirt at the thrift store, and go for the $100 one, despite the two being almost same.
Track your spending
Whatever you spend, make sure you are keeping a track of that. Most of our spending fall into few categories, which are:
- Household need
- Leisurely need
- Impulse purchase
As you keep a tab on all your spending, you become wiser and over time, you stop buying out of impulse. You buy only those items, which are necessary for daily household chores. Of course, you’ll keep coughing up for your leisurely needs, but the amount of money will never be too high.
Keep a track using pen and paper; get yourself a notebook and jot down the subcategories under the three categories mentioned above. For example, “leisurely need” is a category, comprised of various subcategories such as designer garments, eating out in restaurants, purchasing magazines, watching movies, etc.
At the end of each month, review the notebook to see on which areas, you are spending the most. Suppose the amount of spending on leisure need exceeds that on household need. What you need to do then is identify the subcategories, which are the culprits, and stop wasting money on them. The benefit of breaking down categories into subcategories is you’ll get a detailed idea.
No debit/credit card
Use cash instead. Save the credit card for purchases from overseas retailers, and the debit card for those moments when you run out of hard cash. Such moments are quite rare, though.
The biggest problem of using a debit or credit card is the continual accumulation of credit in your account. It was the chief reason the 2008 recession hit the United States. There was a shortage of cash because printing the requisite amount of dollars against the cumulative amount of debt was difficult.
Various Smartphone apps have lately sprung up, which allow you to link your credit card to them. Passbook from Apple and Google Wallet from Google are such apps. You don’t even have to carry your credit card along, just download an app, and use it as a proxy. Resisting such apps is undoubtedly difficult, but hey, easy things always yield zero benefit, right?
Besides, using cash keeps you grounded. You don’t buy when there’s not enough cash to buy, and resume purchasing when there’s plenty of it, simple! No accrual of credit.
What do you think of the four tips given here in this article? Do you think we’ve missed out on anything? Can you suggest more effective tips? Let us know in the comment section.
Tina Roth writes about developing positive habits to help you live a rich and financial independent life. Apart for the editor at blog, Pro Finance Blog, she is a contributor to many other personal finance blogs and helps you craft a financial secure life with her writings.
*Photo courtesy of 401k 2012