Finances are easily one of the most stressful parts of being an adult. We all want to save money, pay our bills on time, and still have enough to spend freely. But achieving that is no walk in the park. It’s not uncommon to feel overwhelmed about finances from time to time.
Maintaining financial stability can require a lot of work — but as they say, the best things in life don’t come easy. The key to making your dollar go further is budgeting. Here are five budgeting hacks to get you started.
1. Use Cash as Much as Possible
The purpose of a budget is to balance your expenses with your income. If you’re budgeting successfully, you should have enough money for the things you want and then some. However, it can be extremely difficult to budget if you’re trying to work your way out of debt. This is why it’s so important to live on the money you make and not rely on credit cards.
You’ve probably heard the saying “Cash is king.” It’s a maxim you should live by while trying to improve your financial standing. There are a few ways you can do this. One is by carrying around cash in an envelope and using that money for certain spending categories. Once the cash is gone, stop spending.
A debit card is also a great budgeting tool. It works like cash in that you’re spending your own money, but it’s less cumbersome than carrying wads of greenbacks. Some debit cards also allow you to take advantage of a round-up savings feature. For each purchase you make, the card will round up to the next dollar and send the difference to your savings account. Not only do you improve your spending habits, you save while doing so — it’s a financial win-win.
2. Utilize a Budgeting Tool
There’s more to budgeting than spending less and saving more. If you really want to improve your spending habits, you need to get serious and look at the numbers. This is where a budgeting tool comes in handy.
A free budgeting tool like Mint or Goodbudget can help you quickly and easily start a budget. Common features built into budgeting tools can give you an assist in numerous ways. They enable you to:
- Track your spending with real-time expense tracking
- Take advantage of savings features
- Create your own budget planner to get serious about budgeting
- Receive personalized tips to help you save more and spend less
Once you’re able to visualize your spending and your savings goals, you’ll be ready to buckle down and budget.
3. Adjust Your Budget Monthly
A budget is not a set-it-and-forget-it financial tool. While you do want to “stick to” your budget, you also need to take monthly differences into account. If you don’t adjust your budget as needed, it will be impossible to follow.
Some areas of your budget will stay consistent each month (rent, car payment, etc.), but many expenses will not be fixed. Vacations, scheduled car maintenance, or holiday gifts are just a few examples of expenses that might affect your budget. So it’s important to plan for these.
Adjust your monthly budget in advance for events that you know about. For everything else, make sure you have savings to pull from. The last thing you want is for all your hard budgeting work to go to waste because of unforeseen expenses. A savings fund will be extremely helpful in times like this and will help you avoid resorting to credit cards.
4. Cut Back in One Spending Area
If you closely examine your budget, you’ll most likely discover that you’re overspending in a certain area. At the very least, you’ll probably see that you can afford to cut back in one area or another. Take a good, long look at what you’re currently spending each month. Which areas can you realistically cut back in?
Maybe you can start couponing at the grocery store. Or perhaps you can work from home to save money on gas each month. Get creative and think of all the ways you can limit your spending to start saving more.
A 2021 Personal Capital survey revealed that dining out was the biggest budget buster for respondents. More than 39% of survey participants cited overspending on eating out. Since this is a common expense for so many consumers, this could be a great place to start. A few meals out per month is OK; just plan for them so you don’t get completely off track.
5. Zero Out Every Month
Budgeting is all about making your money work for you, not against you. Make sure you budget to zero at the beginning of every month (i.e., income minus expenses should equal zero). Once each and every dollar that you earn has a purpose, you’ll feel more secure. When you’re spending recklessly, you’ll run out of money fast, whereas creating a budget shows how far you can really stretch your dollars. What you learn may pleasantly surprise you!
Once you’ve mastered the art of zeroing out your budget each month, try living on less than you earn. This is how millionaires are made. If you’re able to live on less than you earn, you’ll become a saving machine. The more you save, the faster you’ll get out of debt and be able to invest. From there, you can grow your wealth.
Tackling your finances head-on can be stressful, exhausting, and exciting all at the same time. But you just have to take that first step. The longer you put off budgeting, the longer you’ll stay in your same financial situation. So adopt these simple budgeting hacks and start building a brighter financial future.