Creating a budget is pretty straightforward.
But actually learning how to stick to a budget…well, that’s another story.
We all start off with the best intentions.
We’re going to save money, pay off debt, and only buy what we need.
And next thing you know…
Actually, I probably don’t have to tell you what happens next.
But here’s the deal:
Budgeting is just like any other skill. It gets easier with time and practice.
So if you’ve found yourself falling off the wagon, don’t beat yourself up.
Obstacles are a part of everyone’s financial journey.
And I’m here to tell you:
The only difference between the successful people and the not-so-successful people is that they’ve learned a few budgeting tips and tricks along the way.
So let’s get started.
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Tip 1: Start From Scratch
If you’ve got a budget that’s not working for you, then I want you to wipe the slate clean and start over.
And if you haven’t created a budget before, then now’s the time to start.
So let’s begin with the basics:
How much do you make each month? How much do you spend each month?
Write those numbers down. We’ll need them in step 2.
“A budget is you telling your money where to go instead of wondering where it went.”
Tip 2: Get Clear on Your Numbers
Want to know the first step towards financial success?
Knowing where you’re starting from. Knowledge is power, so you have to know your numbers.
Get clear on how much money absolutely needs to go out.
Focus on your six basics first: Food, Shelter, Utilities, Healthcare, Transportation, and Clothing.
You’ll want to cover your necessities before you start budgeting for everything else.
I recommend using a zero-based budget because it gives every dollar a job. This is super helpful when you’re learning how to stick to a budget.
Because instead of having money left over, you’d assign it to a category.
Here’s what I mean:
If you have $100 left over, then you aren’t done budgeting yet.
That $100 has to go somewhere. Savings, retirement, recreation – whatever. Just make sure it’s given a job.
Zero-based budgeting works because it keeps you accountable for every last penny.
In fact, people who use zero-based budgets save 18% more money and pay off 19% more debt.
Aren’t those odds you want in your favor?
“The four most expensive words in the English language are, ‘This time it’s different.’
-Sir John Templeton
Tip 3: Adjust Your Budgeting Percentages
When I decided I finally needed to get my financial sh-t together, it was humbling to realize that I was living a life I couldn’t afford.
You might be too.
But how do you know for sure?
Take a look at these recommended budgeting percentages:
Utilities: 5% – 10%
Food: 10 % – 15%
Transportation: 10% -15%
Health: 5% -10%
Insurance: 10% – 25%
Clothing/Personal: 10% – 15%
Saving: 10% – 15%
How do you match up?
These percentages aren’t absolutely set in stone, but they’re recommended. Do your best to stay in line with them.
I’ve found that it’s easier to stay on budget when my percentages align with those.
Tip 4: Make Your Money Work for You
There are things you still have to buy to live. And since you’re buying things you’d normally get anyway, you might as well save money.
For you, this might mean shopping around your grocery stores flyer. Or buying a FoodSaver to preserve your food.
Those are both great options. But to take it one step more advanced, I recommend using a cash back program like Ebates.
These days, there are several things I only buy online because that’s how I get the best deal.
(And finding better deals helped me learn how to stick to a budget)
So when I combine that with my cash back program, I know I’m saving the most money.
I’m sure you’ve probably seen the commercials for Ebates, but in case you haven’t, here’s what you do:
You sign up for an account (it’s free) and use the search bar to find the retailer you want to shop with. For my visual readers, here’s how that looks:
As you make purchases you’ll get cash back.
Then, once you accumulate your earnings – Ebates will send you a check or deposit that money into your PayPal.
Note: the Ebates link above gives you a $10 bonus for signing up and shopping.
Tip 5: Recognize Lifestyle Inflation
I’ve come a long way.
I earn good money, I work hard, so I deserve it.
Or at least, that’s what we tell ourselves.
It’s that “I deserve it” or “I can make the monthly payments” mindset that leads us to lifestyle creep.
Lifestyle creep means when your income goes up, your expenses rise to match it.
It’s like putting your financial goals on a treadmill – where you’ll never get any closer to reaching them.
If you want to stick to your budget, then start by living within your means.
The idea here is simple:
Spend less than you make.
Once you get that down, then try living below your means – this is where the magic happens.
Establishing this habit early will teach you the power of financial freedom.
How? Because you’ll save more money and make better decisions throughout your life.
Yes, you work hard and you should enjoy yourself. But don’t rob from your future self by falling into the lifestyle inflation trap.
“It’s not how much money you make, but how much money you keep.”
Tip 6: Know Your Goals
A huge part of financial success comes down to living within your means. And when you live within your means, it’s much easier to figure out how to stick to a budget.
And if that’s true, then there’s nothing more important I can tell you than this:
You have to have a strong ‘why’ and remind yourself of it constantly.
Why are you doing what you’re doing?
What’s your biggest financial goal? To get out of debt.
Why do you want to save money? So I can buy a home.
Why do you want to save for retirement? So I won’t be a burden to my kids.
Your goals might look a little different.
But everyone wants to be better off, and you won’t get there unless you define what better off means to you.
Does it mean becoming debt free? Going back to school? Building an emergency fund?
It’s time to start thinking about the BIG picture.
Create a plan, then work the plan.
It might mean fewer vacations this year or getting overtime in at work. Staying up late, and waking up early.
Dining in…at home. Finding smarter ways to save money. Whatever it is, make it happen.
“A goal properly set is halfway reached.”
Tip 7: Only Spend the Dollars You Can See
You’ve probably heard of the cash system.
But did you know that according to the research, when you use cash, you spend 12% to 18% less than when you use plastic?
You see, there’s a psychological component behind spending with cash.
Swiping a credit card just doesn’t sink in as much as spending your hard-earned dollars.
Here’s what you do:
After you’ve created your budget, you set aside cash envelopes for each category.
Once you run out of money in that category – you’re done.
I can almost guarantee that you’ll save more money by switching to a cash system.
Sure, it’s convenient to whip out a credit card. But that convenience is what causes you to spend more than you realize.
The goal is to know how much of your funds are diminishing with each purchase. That’s powerful.
Tip 8: Know Your Weaknesses
I always say that learning how to stick to a budget becomes easier when you put all your cards on the table.
And by that I mean, be honest with yourself about your spending weaknesses.
For some, this might be a daily coffee run or eating out instead of cooking dinner.
My weakness used to be using coupons just because I had them.
I’d get a $10 off a $40 purchase coupon from CVS and I’d end up buying low-value items. That’s when I had to tell myself:
It’s not a good deal if you don’t need it.
And here’s the thing:
We’ve made it far too easy on ourselves to spend money.
Our money is too accessible.
We save our credit card information online, we enable one-click buy from Amazon, we sign up for ‘free’ trials and forget to cancel them.
We all have financial weaknesses.
So use your budget to identify your areas of weakness – like eating out or impulse buys – and keep them in check.
Have a shopping list – even for the little things
And if you see something you like – ask yourself:
Do I really need this?
Do I want to store it?
Do I feel like cleaning/maintaining it?
Your budget helps you become aware of your spending, and your list helps you stick to it.
Clear the Excess
Look for things that are cluttering up your financial life.
Like unused gym memberships or subscription services.
And delete those tempting shopping apps from your phone.
“Frugality includes all the other virtues.”
Tip 9: Implement the 48-Hour Rule
“Let me think about it” is one of the best things you can say when it comes to your budget.
When you hit the pause button for 48-hours, it allows the rational side of your brain to come up with practical ways to spend that money instead.
Like getting out of debt or saving money.
Also, beware of “deals” that are only good for a set amount of time – 20 minutes, 1 hour, or even 24 hours.
Marketers are smart.
They don’t care that you’re figuring out how to stick to a budget.
They want to get you locked in quickly, before you have time to think it over.
Don’t get me wrong, they’re not bad people. They just care about their bottom line, not yours.
So while you wait…
Convert Money into Hours Worked
This is a money saving trick I love and recommend to everyone.
Let’s say a shopping trip cost you $200. How many hours would it take you to make that money?
If you make $20/hour, that’s 10 hours of work.
If you make $15/hour, that’s almost 14 hours of work.
Are you willing to give up hours and hours of your time for that?
Sometimes developing a new mindset will be what you need to stay on budget.
Identify Low-Value Purchases
A low-value purchase is something that doesn’t make your life any better.
If you don’t budget then you probably make this mistake more than you realize.
I know, it’s easy to want the latest iPhone. But how’s that making your life better?
It’s not. Every dollar you spend is a trade-off.
You’re giving up the ability to save more money, invest in retirement, or get a month ahead on the bills.
So get smart about the things you enjoy (like make coffee at home or pack your lunch instead!)
“Don’t tell me what you value, show me your budget, and I’ll tell you what you value.”
Tip 10: Keep Things Special
There’s nothing wrong with going out to eat or enjoying some wine.
But if there’s one thing I’ve learned, it’s this:
Small leaks sink large ships. And little by little, small things add up.
So sometimes the line between “I need it” and “I want it” becomes blurry.
We start eating out more. We “invest” in a new car because we can “afford” the monthly payments.
We start thinking:
I don’t feel like cooking tonight, I’ll just go grab something instead.
And those I-don’t-feel-like-cooking nights happen more often than we realize.
Tip 11: Don’t Set it and Forget it
Reaching financial freedom is not a one and done thing. It’s a lot of little things combined that help us reach financial success.
It’s about budgeting, saving, changing your habits and tracking your progress.
I know some other financial sites recommend putting your finances on autopilot. I disagree.
If you’re learning how to stick to a budget, putting your money on autopilot leaves room for disaster.
So I encourage you to take a few minutes each week to review your budget. This way, you’ll prevent expenses from slipping through the cracks.
Consider it to be ‘mini-meetings’ with yourself. It’s not just about the money. It’s about investing in your future.
I hope you got a little budget motivation today. Let me know in the comments, what’s your biggest budgeting struggle?
Thanks for reading.
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