by Christy Bieber | Jan. 29, 2019
Budget is a word no one likes to hear, but living on some kind of budget is a necessity if you want to get ahead. The key is to find a budgeting style you can actually stick to.
This could mean making a detailed budget allocating every dollar to a specific expense or it could mean making a pretty loose budget that caps spending on needs at 50% of income; spending on wants at 30%; and saving the remaining 20%.
Whatever approach you decide, budgeting is likely to be successful only if you start by tracking spending before you make your budget. That way, you'll have a realistic idea of where you are financially and of the areas where you can cut spending. And, you should build a little "spare" cash into your budget too, as unexpected expenses will inevitably crop up and you don't want them to destroy your careful plans for how to spend.
The easiest way to manage your money effectively is to make as much of the process automatic as possible. When you take a hands-off approach, your cash goes where it needs to without your intervention so you aren't constantly forced to make the responsible choice.
To make life easier for yourself in 2019, set up automatic payments for as much as you can, including your rent or mortgage, your utilities, and your monthly credit card or other bill payments. And, automate contributions to your retirement and savings accounts too, allocating around 20% of income to saving for future goals. If you have all of your money automatically transferred where you need it to go every payday, you'll never have a chance to waste it.
Cutting spending is always a good thing, and one of the best ways to do it in 2019 is to institute a 48-hour rule. Essentially, when you follow this rule, you won't make purchases exceeding a certain dollar value without thinking about it for two days first. It's up to you what threshold you want to set, and it will depend on your household income. For most people, $100 is a good limit.
When you take a few days to think about any purchase over $100, you'll have time to make certain the item is something you really want. Plus, you can use that 48-hours to comparison shop for prices and look for coupons and deals to make your purchase as cheap as it can be.
Another good way to cut spending in 2019 is to plan a certain number of days each month when you spend nothing at all. This would mean bringing your lunch to work, skipping the morning coffee shop run, and not giving into the urge to spend on anything for a full 24 hours.
No-spend days help you save money not just on the day when you keep your wallet put away, but also other times as well because they make you more conscious of all the little spending you do. They also help you get out of the consumer mindset.
You could aim to have one no-spend day a week in 2019 or could challenge your spouse to see who can have the most no-spend days. Just pick a schedule that works best for you. The key is to make sure you're giving yourself a little time when no money leaves your bank account.
Setting financial goals is important if you want to grow your wealth, and you should have at least one goal for 2019. But you're much more likely to be successful if you go beyond just setting goals and make a money plan.
Start with deciding what you hope to accomplish in 2019. This might involve saving three months of living expenses as an emergency fund, setting aside 15% of your income for retirement, or saving up for a down payment on a house. Then, figure out what date you want to achieve the goal and make a specific plan to do it. If your goal is to have an $8,000 emergency fund saved by the beginning of 2020, your money plan may involve transferring $667 into a special savings account at the end of each month.
Whatever plan you create, track your progress throughout the month to make sure you're still on schedule to accomplish it.
If you try out these five simple strategies for getting ahead in 2019, you're sure to end the year in a better financial position than you started it in. You'll be able to look back on 2019 as the year you got a lot closer to mastering your money and achieving the financial security you deserve.
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