Creating your first budget is great, but that’s the easy part. Anyone can say that they’re going to limit themselves to a certain amount of spending and contribute 20% of their income towards their financial goals, but sticking to the budget is where warriors are born. A little dramatic? Perhaps, but sticking to a budget is extremely difficult for many people, including myself.
There’s almost no where you can go where you aren’t going to be tempted to buy something and go outside of your budget. You can go to a friends place and be tempted to buy a coffee or a box of Timbits on your way over. If you’re going out with a friend, you can be tempted to buy just one or two more drinks or that amazing plate of mac and cheese wedges. Even if you stay home you can go online and browse through catalogues of books and clothing on Amazon. There’s almost nowhere that you can go to resist temptation, so learning how to master and control your temptations is a key part to sticking to your budget.
Track your expenses
This is a big one. Tracking your expenses is a great way to find out where your money is going and how much you’re spending on each different expense. Believe me, I was embarrassed at myself when I looked through my list of expenses one month and realized that I had spent almost $100 on socks. Side note, my sock game is on point because of that, but I have WAY more socks than I really need. Okay, now to get back on track.
If you’re using the cash diet (I talk about this below, so keep reading!), you’ll have to do this manually, which means you can do two things: 1. Keep your receipts and track your expenses at the end of the day/week, or 2. Bring a pen and a pad of paper with you everywhere and write it at the cash register. If you are really serious about your finances, I’d 100% recommend the second option. It’s a little embarrassing and it’s a real hassle, especially if you can’t find your pad of paper and pen in a quick moment while there’s a line behind you. That’s enough reason for me to think twice about making a purchase.
Bonus points on this if you show someone your purchases every week. You for sure will think twice about any embarrassing purchases or questionable decisions if you know someone else will know.
If you’re not using the cash diet, your bank app will list your transactions from your credit/debit card every month. You can write them down again or put them into a spreadsheet. I just recommend taking the time to do something with these, so you have a chance to read over each expense and think about how necessary it was.
A final option here is to link up your accounts to a third-party software like mint.com. Mint.com links my credit card, bank accounts, and investments all into one software to make all of my finances easy to track. The catch on this is that this opens you up to some risk with having a third-party access your accounts, but it’s run by Intuit, one of the most secure and safe companies in the world. I use Mint.com regularly, for the record.
Go on a cash diet.
No, this doesn’t mean you only eat your cash to lose weight. That would be an expensive diet and probably not one that would yield you any good results. The cash diet is simply only spending money with cash. The idea is that if you’re paying with cash for something, you have to actually see the money changing hands, and you’ll immediately see the results of your purchase. Isn’t it hard to split a $20 for a coffee? It hurts seeing that sum of money get split up into some coins you may not ever use and a couple of smaller bills. That pain is what gets people to stop buying things that they don’t need.
To follow the cash diet, you go to your bank or one of their ATMs at the start of the month and withdraw the money that you’ve budgeted to spend for that month. You can do this on a weekly basis as well, but for the sake of the post I’ll just use a month for my examples. Once you withdraw your money, that’s it, you can’t withdraw anymore for the rest of the month. From your budget, you should already know how much you’re going to be spending on everything if you wrote everything down and listed all the places where your money goes. You can set aside specific amounts of your cash and put them into envelopes that are labelled with the expenses. For example, you can have an envelope with ‘Groceries’ written on it, and every week when you go grocery shopping, you can bring the money you allocated towards your groceries. An important part of this is to LEAVE YOUR CARDS AT HOME. This means your credit cards and your debit cards. Leave them at home. If you only bring cash, you definitely can’t spend more than what you bring. As soon as that credit card finds it’s way into your wallet and in the grocery store, there’s a good chance that it’s going to be swiped when you just need to get that $10 organic box of cereal.
Some of you might be screaming “but what about building my credit rating or about those points I’ll be missing out on!?” and you’d be right. You would be missing out on building your credit rating and accruing points for that vacation you want to take, but if the cash diet is the only way you can control yourself while you’re out, it’s probably best to stick to that.
I don’t personally use the cash diet. I’ve tried it. It worked for me. I moved on because I found I was able to control my spending habits with my credit card. I’m building my credit rating and collecting those rewards points myself, but I did start with the cash diet to learn to control some of my previous needless spending. My mother might tell you that I don’t control my temptations well enough and that I spend money on frivolous things, but I digress.
Make your budget into a game.
Gamifying your budget is a great way to get you to follow it on a weekly budget. Build in little rewards for yourself, so if you stick to your budget for the week then you can buy yourself a latté at Starbucks or give yourself a small treat. It’s a great way to get a little more into your whole budget idea, if you like the feeling of achievement.
It’s like when you go for a run just so you can have that one extra beer when you’re out with your friends, or when you eat a salad at lunch so you can crush AYCE sushi for dinner (I’ve done that countless times). Giving yourself a small treat isn’t going to be the absolute best thing for you, but it’s definitely not going to be the worst thing for you either. If it’s going to be what gets you to start following that budget of yours, well it’s a great idea to me then.
Those are my 3 ways of following my budget. I give myself small rewards when I do well with my budget. All of my expenses are recorded, added up, and spit out into some easy-to-read graphs for me each month. Not tracking my expenses myself was a very freeing moment, especially when I would forget from time to time (woops).
Anyways, let me know if you have any other tips that help you follow your budget. Let me know if these worked or if you totally blew your budget and want to blame me. Any feedback is good feedback!
Thanks for reading, eh!