The best way to have access to more money is to save, but it’s easier said than done. We know why we need to save some of our money. We all have great intentions to save and budget, but when it comes down to it, we get sidetracked or just forget. Creating a budget and sticking to it can be challenging. What if there were some hacks to keep you on track? With these hacks, you can budget, save, invest, and reach your financial goals no matter how lofty they may feel right now.
Here are the top 7 things everyone should be doing to stay on top of their finances.
1. Know your Income
Do you honestly know how much money you bring in each month? Most of us have direct deposit so we don’t even pay attention to our income. We have an idea of how much we make, but we don’t know to the penny.
You need to know.
Look at your bank statements for the last few months and add up all income from your job, any side gigs, alimony, child support, or passive income sources you have.
2. Know your Expenses
Expenses are another thing that we typically think we have an idea about but we don’t know to the penny what we spend.
Pull your bank statements from the last few months and categorize your expenses. Include both necessary expenses (mortgage, utilities, insurance, etc.) and unnecessary (fun spending). Break the expenses down into different categories so you can see where you spend your money. It can be eye-opening.
3. Budget for Saving and Investing
As you look at your income and expenses, you need room for saving and investing. If you are already spending more than you bring in, move on to the next step – deciding where you can cut back.
If you’re ahead of the game and have disposable income, budget in saving and investing. If you have high-interest consumer debt, pay that off first, then budget the money used to pay your debts off to go into your savings or investment accounts.
4. Decide where you can Cut Back
If you don’t have room for debt payoff, saving, or investing, decide where you can cut back on your expenses. This is when categorizing your expenses helps.
Look at each category, which seems too high? Everyone will have a different answer to this question, but here are some common areas people overspend:
- Coffee shops
- Nail and hair salons
- Shopping
- Subscriptions
- Gym memberships
You may identify with some of these issues of overspending or you may overspend elsewhere. Figure out where that might be and try to cut back. The money you save by cutting back should then be allocated to debt payoff, saving, or investing.
5. Create a Plan
This is where most people fall off. They have great intentions but then don’t follow through. If you follow a plan, though, it’s easier to stick to it.
Everyone budgets differently, but here are a few common options that people find success using:
- 50/30/20 budget – Allocate 50% of your budget to your fixed expenses (mortgage, utilities, insurance, basic food, and clothing needs, etc.), 30% to your unnecessary or luxury expenses, and 20% to debt payoff, saving, or investing.
- Zero-based budget – Give every dollar you bring in a ‘job.’ Common jobs include paying the mortgage, paying utilities, buying food, transferring to savings, investing, or paying down a credit card. The key is to make every dollar ‘work’, so you are actively getting out of debt, saving money, and meeting your financial goals.
- Envelope budget – If you operate in cash, an envelope budget can help. You assign each category that you spend an envelope with a dollar amount on it. Use the cash in the envelope for only the designated category. If you spend all the money in the envelope, you’re done in that category until next month.
6. Track your Progress
You could create the most beautiful budget and have the best-laid plans, but if you don’t track your progress, you’ll fall off the bandwagon fast.
Rather than ‘winging it,’ track your progress. Any method you’ll use consistently is the right one for you. Here are some common options:
- Create a spreadsheet – If you love numbers and spreadsheets, create a spreadsheet that reflects the budget you’ve chosen. Enter any transactions you have and track your progress to make sure you’re on track.
- Use an app – There are hundreds of budgeting apps (many are free) that you can use to track your budget. Some even link to your bank account and automatically log your transactions, such as Mint.
- Use pen and paper – If you are ‘old school’ and want to track your budget yourself, you can use pen and paper, but make sure you record every transaction. This is the most tedious way, but some people still prefer it.
7. Get an Accountability Partner
Married or not, you can have someone keep you on track with your budget. Knowing you have someone to answer to if you spend outside of your budget or if you don’t transfer money to savings like you said you would, will keep you more accountable.
It’s a lot harder to overspend or ‘forget’ to save when you have someone to answer to. If you’re married, you and your spouse should have ‘budget meetings’ monthly to make sure you’re on track. If you’re single, partner with a friend or family member to stay accountable.
Final Thoughts
Saving and budgeting aren’t as overwhelming as they seem. With the right plan in place, the best support, and enough grace to know that you’ll make mistakes but can pick up the pieces and move on, you’ll be able to get your budget on track.
Saving may feel like a sacrifice now, but it’s an investment in your future and one you’ll be grateful for when you need it. Let your money today be there for you tomorrow by learning to save and invest in your future. Subscribe for more business, sales and investing posts. Have a lovely day.
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