Budgeting: A Diet for Healthy Finances
A budget is an essential part of personal finance, like a diet is an essential part of your health. Here are some tips to make budgeting easier.
"I need to go on a diet."
"I need to go on a budget."
These two phrases are said a lot today, and usually said quite unenthusiastically. You may think that a budget, like a diet, means a lot of hard work and denying yourself. Budgets and diets are both "easier said than done," but are not as complicated as you think. Both budgets and diets seem difficult in the short run, but pay off in the long run.
But budgeting and dieting are more than just losing 15 pounds or saving $10,000 in five years; they're about making a lifestyle change that influences your day-to-day eating and personal finance decisions. Quick fixes are not often successful in the long-run. Also, it's important to stick to both diets and budgets to maintain the goals you set.
Budgeting Tips
Here are some tips to make budgeting easier:
Pay yourself first. Your savings should be should be included in your budget, along with the rest of your expenses. Make saving part of each paycheck a priority: See if you can have a set dollar amount directly deposited to your savings account by your employer (which many do, and is an easy way to begin saving). If you don't see the money, you won't be tempted to spend it. Think of it as paying yourself before you pay anyone else.
Do the math. Sometimes, actually seeing the numbers behind your budget can make your budget more realistic and help you see the progress you're making. Our Savings Calculator can help you figure out how much you could be able to save with your budget.
Do sweat the small stuff. Many budgets break not just because of big-ticket expenses, but also because of the "little things" like impulse purchases that add up over time. You don't need to deny yourself those small pleasures and conveniences, but a simple step, such as eating out only once a week instead of every other day, can make a difference.
It's OK to splurge once in a while, too. Like the occasional sweet treat, the occasional small splurge is not only OK, but important to keep from feeling like you're depriving yourself. Small splurges are also a good way to reward yourself for meeting financial goals, like saving a certain amount of money or paying off a debt.
Don't go it alone. A financial expert can give you a much-needed "second opinion" You can also get smart personal finance tips at Your Money Counts.
Be flexible. Even the best plans are subject to change, so be ready to make any changes to your budget as your life changes. It's also a good idea to review your budget every 3-6 months to track your progress and determine what's working, what's not working, what you should do differently, and how you plan to change.
Our Resource Center is a good place to get financial advice, too.
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These are general recommendations not applicable to all financial situations. Every financial situation is unique. Further, the suggestions and recommendations contained within the content provided are not an assurance of any future result. Be sure to discuss your specific financial circumstances with a legal or financial expert. Contact us for more information.
