The common thought for budgeting is that you need to specify how much money you are going to allow yourself to spend on however many different categories of things you decide. For example: Groceries, Clothing, Mortgage, Sports, Entertainment. I’ve never been a believer in that and think you should consider looking at budgeting differently.
So lets talk about 4 tips to better budgeting:
1. Subtract Your Savings Goal
Say for example you bring home $50,000 per year, but you know that a year from now you’d really like to have $10,000 sitting in your savings account. That means that we are going to structure your budget with the mindset that you actually bring home $40,000. Just ignore that other $10,000 and you’ll shock yourself with how easily you stashed away $10k.
2. Don’t Categorize Your Spending
You may have heard me refer to “Allowed Spending” and this is the sum that I give myself each week to live off of. This is a portion of what is left after my fixed expenses and savings are subtracted from my monthly income. I give myself full discretion to decide how I am going to use that Allowed Spending each week. Doesn’t need to coincide with categories, and this is just one way that budgeting can be simplified and less daunting to a newcomer.
3. Give Yourself a Break
Sometimes things come up and you need to spend a little more than you’ve allotted for yourself. Be mindful of it, but don’t sweat it. Just figure out a way to make up the difference. Maybe it’s by giving yourself less Allowed Spending the following week, or cutting back some other way.
4. Have Fun With It
Once you start tracking your savings, and allotting yourself a certain amount of cash per week for spending… it almost turns into a game of “okay I have $100 left for the week, what should I prioritize, and hey maybe I can even carry some of this over for next week!”. You’ll see it’s fun, and a rewarding challenge at the same time.
I sincerely enjoy chatting with people about wealth building measures, so if you have any questions or just want to brainstorm, contact me any time. Here and happy to help!