If you've vowed to keep your spending and saving under control via budgeting, then bravo! Budgeting can be immensely effective, helping you see and manage where your money comes from and where it goes.
It's all easier said than done, though, so here are some budgeting tips to help get you going.
- Be simple and specific. Don't just aim to budget because it seems a good thing to do. One of the most powerful budgeting tips is to start with a goal, such as getting your retirement accounts to a certain point, saving a down payment on a house, or accumulating funds to send junior to college.
- Estimate intelligently. You want to get a handle on your cash inflows and outflows for the whole year, but it would be a drag to spend a whole year doing so. So monitor your income and spending over a month -- or, ideally, several months. If you spend $25 per week on burritos during a month, you can safely estimate that your current annual burrito spending is $300.
- Budget more easily with a spreadsheet. You can keep track of your budget with charts in a notebook, but if you're a little computer-savvy, try using a spreadsheet. It will permit you to play with numbers, seeing what happens if you cut back here and add some money there. It's also easy to make changes and adjustments to a spreadsheet.
- Be creative in finding ways to save more and spend less. You don't have to simply cut back on your spending. For example, if you just received a tax refund, you can park that in savings or a retirement account pronto -- before you can spend it. You can do the same with a raise or bonus at work, too, and you likely won't feel too much of a pinch. Don't think of your salary as your income limit, either. You can take on a temporary or long-term side job to generate additional funds, consider selling unused items in your house, or maybe take in a boarder for a while! These budgeting tips might change your lifestyle for a while, but they can also bring in a lot of needed money.
- Use plastic to improve your financial condition. Don't assume that all budgeting tips will recommend not using credit cards. As long as you're not falling into debt, they can be helpful. If you regularly charge a lot to your credit card, you might find a card that offers generous cash-back rewards. American Express, for example, offers a card that will pay you up to 6% back on grocery-store purchases and 3% back on gas. If you spend $100 per week at your supermarket, that's $5,200 annually, and 6% of that is $312. Spend $30 on gas per week, and you're looking at an annual $1,560 cost and nearly $50 in savings.
- Make it automatic. This is one of the budgeting tips that hurts the least. Many financial moves these days can be automated, reducing the chance that you'll find yourself with money in hand, ready to spend it. You may be able to have funds deposited directly and regularly by your employer into a savings or retirement account. If you find it hard not to spend all the money that arrives in your paycheck, consider changing your tax withholding at work so that more is withheld. Your refund will thereby be bigger, giving you a savings installment. (This strategy does, however, entail lending money to Uncle Sam interest-free throughout the year.)
- Use budgeting to make your relationship stronger. This may be one of the most surprising budgeting tips, but keeping your finances under control can improve your marriage or partnership if money has been the flash point for arguments and fights.
Budgeting doesn't have to be hard or painful. Simple tips like those listed above can quickly improve your financial condition.