Now that we’ve entered a brand-new year, you might think that it’s a good time to start improving your spending habits. Something as simple as changing the way that you approach money can help you to save more cash and spend less time worrying about your finances in the year ahead. The only problem is that for many people, budgeting can seem like a daunting prospect.
If you’ve never had a budget before, then tracking your spending habits might sound intimidating. The good news is that it isn’t nearly as stressful as it seems. There are plenty of simple ways that you can get more control of your money in 2019.
1. Visualise What You’ll Do with the Cash
Does the thought of logging your expenses fill you with dread? Why not focus on something a little more positive instead? A lot of people find that budgeting becomes less stressful when they can visualise what they’re going to do with all the money that they’re saving. For instance, do you hope to have less debt to deal with by the end of the year? Are you looking forward to a family holiday next year?
It’s much easier to stick to your budgeting tactics if you have a goal to guide and motivate you. Make sure that you know what you’re working towards.
2. Track your Spending
Tracking your spending is probably the least-fun part of any budgeting strategy, but it’s also one of the most important things that you can do. The only way to sustainably make changes to your spending habits is to see how and where you’re using your money. The good news is that you don’t have to carry a notebook around with you unless you want to. There are plenty of smartphone apps that can track spending automatically for you.
3. Treat Savings as an Expense
These days, most of us automate paying for certain bills. For instance, you probably have a direct debit set up to pay for things like your utility bills and your car insurance. With that in mind, why not consider automating your savings habits too? Each month add an extra “bill” to your expenses, by paying something into your savings account.
Rather than telling yourself, it’s something that you can optionally do each month, treating your savings like a bill will help you to stay committed.
4. Keep it Simple
Budgeting doesn’t have to be a complicated process. Saving money can be as simple as telling yourself that you’re going to compare interest rates before you take out a new loan, or spend more time paying off your debts when you have extra cash at the end of the month. If you’re new to budgeting, don’t overwhelm yourself with countless apps and spreadsheets, just keep it simple.
Find an area or two where you can cut down on your spending on each month, and start there, then track your results over the next couple of months.
5. Start Small
Speaking of keeping things simple, don’t try to change your entire life with budgeting overnight. Pick one part of your financial life that you know you need to change and start there. For instance, if you know that you spend more money than you should on food, then try cutting down on that expense by taking a packed lunch to work or forcing yourself to try out some new recipes at home.
You can even start with a basic goal, like putting an extra £10 a month towards your credit card and loan bills. You’d be surprised how quickly things can add up.
6. Have a Buffer
Even if you’re starting small with your budget, that doesn’t mean that you’ll be immune to any mistakes. Things can go wrong one month that cause you to over-spend and tap into your savings. Rather than losing faith in the entire budgeting system, give yourself a break. Over time, it can help to build a buffer or emergency savings pot that you can tap into when something goes wrong. That way, you won’t be taking steps backward from your goals.
7. Celebrate your Achievements
Finally, we all know that budgeting is a good thing to do, but it can be a challenge too. Pushing yourself to alter the way you spend isn’t easy, so when you accomplish something significant, don’t be afraid to award yourself. For instance, try putting a few pounds aside each month so you can reward yourself if you’ve stuck to your targets each week.
Disclosure: This is a collaborative post.