5 Budgeting Tips
Budget can seem like a bad word to some. However, the reality is that no matter how high or how low our income is, we need to budget! A budget is telling our money where to go. It’s what comes in minus what goes out. Of course, our goal is to have that number be a positive number.
A zero based budget is when we designate how much money will be going into our savings or sinking funds (more on that on #5) and have our ending balance as $0.
Maybe you have been budgeting for years or you’re new to budgeting. No matter what, these are tips that have helped me.
What have you been spending? When we are looking at creating our budget or even reevaluating, it’s important to look at what we have been spending. If we have been spending $200 a week on groceries and decide to budget $100 per week, that’s likely not going to work. Being aware of where we are spending our money is extremely helpful not only to see where we can cut back, but to be realistic on how much we are spending in each category.
Reevaluate. It typically takes about 3 months for you to figure out a budget that works for you. Lane and I have used a budget for most of our marriage (almost 20 years!) I have used the same spreadsheet for the past few years. But even with regular use, I have to reevaluate categories. Life changes. Inflation happens. One category I had to make a huge change in was our fuel category. I had to raise the amount I had budgeted due to the rise of gas prices. But since I had to raise this category, I had to determine the places I could cut back to make this change work for us. Maybe your commute has changed or your family has grown. Taking the time to reevaluate your budget occasionally is really important.
Schedule check-ins. This is one of the most important parts of a budget. Creating a budget isn’t really the most important part. If we don’t regularly check in and see how we are doing, it’s sort of pointless to create a budget. And rather than just checking in at the end of the month, I have found that checking in on my budget each week works best for me. This is a part of my regular Monday routine. If you are new to budgeting, checking in more often than that might be a great idea!
Cash is king. (Sometimes) Using cash for certain categories is a great way to keep a firm grasp on exactly what you are spending. You can find wallets that help you create these categories. (HERE is one on Amazon.) I still take cash out of my account each month to spend for a portion of my groceries. I keep track of this by keeping the receipts and then categorizing them when I get home.
Use sinking funds. Sinking funds are categories where you are saving for an item or event that might take longer than one month to save for. These categories can include vacations, Christmas presents, a remodel project, or even Back to School clothing. Putting a few dollars aside each month and then not having to use debt for these events is a great way to keep your budget in line and stay out of debt!
These are just a few ways I like to keep my budget on track. Do you regularly budget? What are your favorite tips?