Creating a custom budget is easier than it sounds.
For those of you who struggled to follow a budget; this is the perfect strategy for you.
According to a Gallup poll, 32% of Americans budget consistently.
The other 68% feel budgets are too restrictive, only work for high-income earners, or cannot be done when expenses can’t be cut.
Budgeting is a tool to help you spend your money with purpose. It is only 50% of the process and step one toward controlling your money.
The other half is a strategy to pay off debt for good and find creative ways to increase your income.
”Have confidence that if you have done a little thing well, you can do a bigger thing well too.
– David Storey
This may seem like a big thing now but with a little practice, it can become a little thing.
Below I give you 6 of my best budgeting tips, 6 budget pitfalls to avoid, and the steps to create your own custom budget.
6 of My Best Budgeting Tips
Start paying off your smallest debt
Paying off your smallest debt will start to free up your money.
After identifying the smallest amount you owe, pay as much over the minimum payment as you can afford until it’s paid in full.
In the meantime, pay the minimum payments on the rest of your debts.
Work toward not using your credit cards
Once you start applying the first tip above, this will start to become easier.
Getting to a point where you aren’t using your credit cards will stop the vicious cycle of sending you deeper into debt.
Wait at least 24 hours before making large purchases
When I say large purchases, I am referring to buying vehicles, large appliances, and expensive electronics.
Waiting 24 hours will help you get past the emotional want of the new item.
You will have a clearer head to decide if you really need the purchase.
If so, do you really need the most expensive option?
Meal plan before buying groceries
Deciding what meals you are going to make will help prevent you from overspending at the grocery store. The idea is to purchase ingredients. You can still buy snacks and one-off items your family goes through. This tip is to help lower your grocery bill every month.
Always take a list to the store
This tip is part of meal planning.
Every time you go to the store for household or food purchases.
Always take a list and only buy what is on it.
Make budgeting fun
Everyone hates to budget, it requires sitting down for hours to create spreadsheets and lists.
However, there are ways to help make this fun.
- Find budget-coloring sheets to show progress toward saving or paying off debt. It is a colorful way to follow your progress without using calculations. These can be found on Etsy, Amazon, or the Budget Planners Shop right here.
- Create a picture collage that shows your dream life. What does this life look without debt? Put it somewhere you will always see it. Turn it into wallpaper on your phone or hang it in a prominent place at home.
- Include a self-care item (hair styling, monthly massages, mani/pedi, etc)
- Create a reward system for yourself. What will motivate you to achieve your budget goal each month?
- Find a budget buddy. This is someone who will help keep you accountable. It can be someone in a personal finance group on facebook or someone in your life.
- Set small goals you can achieve each month. The small goals will lead you to your larger end goal
- Go Digital; find a digital budgeting app to help you automatically track spending.
Budgeting Pitfalls to Avoid
Do not try to guess your monthly expense totals
When building your budget it will be tempting to guess how much you spend in each category.
But I guarantee, you are spending more than you think.
Look at last month’s activity to write down amounts you are actually spending.
Account for irregular/yearly expenses
These types of expenses are property taxes, vehicle licensing, yearly subscriptions, holiday spending, etc.
They can really throw off a budget when you are not expecting them.
Not having a savings account
Right when you start out, you may not have any money left to save.
As you start to free up money, start building an emergency fund.
Cutting out all the fun
Include at least one fun outing. If you take away everything you enjoy then you will not stick to your budget.
The idea is to make a positive change with your finances not restrict them.
No account buffer
You leave this amount in your checking account as extra. It is a second fail-safe to keep irregular/yearly expenses from throwing you off track.
I keep $500 in my checking account at all times. I do not spend it on anything else.
You may want to work on saving this money before building your emergency fund.
Relying on your bank account balance
It is very tempting to skip tracking your expenses on your own.
It’s natural for you to rely on your bank account balance regularly.
The problem is any bills on autopay may not be deducted from the balance yet.
You could have already overspent without knowing it.
Steps to Create Your Own Custom Budget
Below are budgeting user guides I have written to help you create your own custom budget.
In order to help you customize, I provided the links and a short synopsis of what is unique about each budget type.
Each user guide includes; how they work, pros and cons, systematic steps to create each budget method, and how to manage each effectively.
Review the steps for each budget method. As you are reviewing, create a list of what you really like about them.
Then add those items to your budget for your perfect customization.
Just because each method has its own rules does not mean you have to follow it exactly as it is written.
This process is all about designing a budget that is perfect for you.
How to Create a Budget for Beginners
Here is where you learn the basic steps to budgeting and the common types of budget categories.
Every budget method uses these basic steps.
How to Create a Biweekly Budget that Actually Works
A biweekly budget teaches you how to set up your bill payments based on your payday calendar.
Also included are a spending challenge and the 3rd paycheck wonder phenomenon.
Note: This method will also work for a weekly payday schedule.
Discover 9 Easy Steps to Create Your Cash Envelope System
The cash envelope system helps you stop overspending and using credit cards to cover monthly expenses.
Additionally, we will cover digital budget apps so you can be paperless; they can be used for any budget method.
How to Create a Values-Based Budget Using 5 Easy Steps
A values-based budget helps you find what is the most important to you in your financial life.
You will learn how to identify your core values and how they guide you when creating your budget.
7 Easy Steps to the No-Budget Method
The no-budget method is great for individuals struggling to budget regularly.
You will learn how to create a budget that works without tracking your spending.
You may even discover some mad money (monthly allowance) you can spend on anything you want.
The Anti-Budget: Easily Spend Your Money the Way You Want
The anti-budget, similar to the no-budget, also favors not tracking your spending. T
he focus is to completely automate all of your bill payments.
This user guide also dives deeper into setting up an account buffer and a low balance alert on your checking account.
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Concluding Thoughts
You have solid reasons why budgeting does not work for you; I respect that.
Nevertheless, try this strategy for at least 90 days.
You may find your customizations work the best despite your reasons. What do you have to lose?
Once you are comfortable with your custom budget start looking at ways to create a debt pay off strategy.
Happy Reading!
References
https://www.debt.com/statistics/
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