Personal finance budgets are one of those things that everyone has but few follow. Many working adults either ignore a budget they already made or simply revise it every month to reflect their undisciplined spending habits. What’s a solution to this common problem? The trick with budgets is two-fold. First, when you create one, make it as detailed as possible. The second part of the technique involves taking certain actions in order to stick to the numbers you’ve put on paper. That means borrowing wisely when the need arises, having an in-place emergency fund, engaging in regular monitoring of your spending, and purchasing groceries at the lowest prices available. Take the following steps to up your chances of sticking to the personal monthly budget you make.
Make a Detailed Plan
The old saying, the devil is in the details, was not about budgeting, but it certainly applies to the topic. That’s because the more detailed you make your spreadsheet, the more likely you’ll be to stay on target. Be careful to include every line item of expense you incur in a typical month, as well as all your sources of income. Also do not geek yourself up in assumptions that planning out your money’s purpose is going to result in tons of self-sacrifice. Budgeting actually takes a more significant amount of discipline than it does sacrifice if you are honest with your line items in the planning stage. You can still do all the things that enrich your life while on a budget. Everything from taking a vacation, to volunteering in your community, to owning or fostering animals is all still possible.
Use Home Equity When Borrowing
When you need to borrow, taking out a home equity loan is usually the most cost-efficient way of doing so. Plus, because of favorable interest rates and easy qualification, this technique helps working people stay within their monthly budgets with slight adjustments. The best way to gain an insight into how HELOCs (home equity lines of credit) and home equity loans work is to review a helpful online guide that shows what major lenders charge. That way, you can see in advance if leveraging your built-up ownership stake in a house is something that makes sense for you.
Do Monthly Monitoring Sessions
Monthly monitoring, especially for the first six months after creating your first budget, is an essential ingredient for success. What should you look for? First, identify areas where you overspent within a particular category, like eating out. Next, be brutally honest and decide whether to increase allowed limits on some expenses, making sure to reduce others to keep the overall balance. Regular monitoring is about making small adjustments here and there, the key word being small. Spend several months honing the numbers until you’re satisfied, and then put in a major effort to stick to the plan for at least six more months before making additional changes.
Join a Wholesale Club
Whatever they’re called in your local area, shoppers’ clubs and wholesale clubs that charge an annual membership fee of between $50 and $100 are usually a very good deal for single people and families. Why? To determine if it is worth it, all you need to do is compare the average prices of market baskets of goods. Typical chain style grocery stores, even the ones that have their own savers cards often feature market baskets that cost between five and fifteen percent more that the exact same items from a wholesale club. The bottom line is you stand to save more than $1,000 annually by purchasing that $100 wholesale membership, which is a win-win situation no matter how you add it up.
Add in Challenges Periodically
Once you have had some practice with your budget and you feel comfortable with how to track your dollars and cents, consider upping your game a bit. One way to save more is to find money that already exists. The best way to accomplish this is to intentionally spend less in one category of your budget for a determined period of time and allocate those funds towards a savings goal. For example, although you might have a line item dedicated to eating out, maybe you declare 30 days without doing so. This is a reasonable amount of time to generate some found money that is significant and also is not so restrictive that you feel burdened or like you would never be able to complete such a challenge. If you are naturally competitive this might excite you in terms of setting a goal for yourself and then reaching it. Additionally, once you see what kind of results you can yield from being creative with your budget you might continue to challenge yourself at random.