Budgeting Hacks That Actually Work
What You Should Know About Budgeting
It can be easy to take money for granted. That is, at least, until you can't afford something that you want. Overspending is a major problem that affects most people, at least to some degree. Unfortunately, overspending makes it difficult, or impossible, to save enough money to afford those big purchases you have your eye on. That's why it's so important to put a budget in place, and to use that budget wisely. Here are a few budgeting hacks that can take some of the pain out of your monetary gain.
Multiply, Don't Divide
It seems that new monthly subscription services are popping up all the time. Add these costs to your pre-existing monthly commitments, and you can quickly find yourself with a busted budget. However, there's one easy way to understand the true costs of any monthly commitments you are considering: multiply up, instead of dividing down. If you multiply the potential monthly cost by twelve, that is, the number of months in a year, you can get a better picture of just how expensive a specific service is. For example, a service that costs $25 a month doesn't seem that expensive. When you multiply that cost by twelve, though, that measly $25 a month becomes $300 a year, which can be a real burden on your budget. Don't be lured into monthly commitments that seem like a deal, only to find out they will kill your annual budget, over time.
Consider the Connections
As you work on perfecting your budget, you'll likely need to make changes from time-to-time as life circumstances change. When you make these changes, though, it's important to consider all the budget categories that will be affected by a specific change. For example, if you decide to purchase a new or used car for sale in Seattle, it's likely that the "car payment" category won't be the only category affected. You may need to adjust auto insurance, gasoline costs, repair costs, as well as other auto-related categories to get a full picture of the affordability of your new purchase. This information will ensure that you aren't blindsided by increased costs that sink your budget, and your savings account.
Remember the Annuals
As important as it is to multiply up when building your budget, it's likely that you have some expenses, which occur only once a year. These expenses can be easy to overlook given their infrequent nature, making it less likely that they'll show up on a recent bank statement or check register. To find all of these expenses, it's crucial that you consider at least a year's worth of personal financial data before building your budget. When you do come across these expenses, you can create a new line item on your budget specifically for that expense, then divide the annual cost of that expense by twelve.
Play the Numbers Game
While playing around with different numbers in your budget isn't the most exciting way to spend a Friday night, this mundane task is still an important exercise to undertake from time-to-time. It can be easy to fall into a rut with your spending, which can cause you to overlook opportunities to save money that, if implemented, could help you achieve your financial goals more quickly. Every six months or so, open up your budget with the sole purpose of changing numbers around to see how it affects your overall financial picture. If you find something intriguing, then work to figure out how to implement the change you discovered.
More than anything, the best way to stay on track when working with a budget is to build in some accountability. The person or people holding you accountable don't have to know every last detail about your finances. However, they do need to be aware of what your plans and goals are, so they can check-in with you regularly and make sure you're sticking to your commitments. Regular accountability will remove the burden of trying to hold yourself accountable, freeing you to live out your budget and work toward those long-term financial goals.