How to Create a Budget (and Stick to It!)

Budgeting is the best way to work your way to financial freedom. When you budget appropriately, you can quickly pay off old debts and free up your hard-earned income to help grow your wealth and prepare for early retirement.

Below we will go through the easy steps towards building a workable budget and how you can minimize your monthly payments and get out of debt quickly and easily.

Say No To Cash

While cash may be king, it is also untraceable. It is easy to cheat yourself and your budget by spending cash on things you should not be buying. While you should not be dependent on credit to make ends meet, using a debit card ensures that you are tracking all of your spendings and are able to evaluate where you need to cut back while you evaluate your budgets moving forward.

You may read advice that states the opposite – that spending cash feels more difficult than spending money on a debit card – so a card encourages more spending. The reality is if you are looking at your transactions daily and observing your spending habits, you will be more cognizant of the money you have on hand and what is going in and out of your account.

Another often ignored issue is that spending cash often results in a lot of change. Change can be thrown into a coin jar or easily lost – and it adds up fast. A better method is to set up a program on your debit card app where the change goes automatically into your savings account. That way you are saving for your future while keeping a record of all of your transactions.

Set Up a Tracking App and Observe

There are many apps that you can link your accounts to. These apps will give you notifications when you are outside of the spending limits you set for yourself per category. This is where you will begin to set your budgets.

 Budget Apps are created to make the process quick and easy. You can also dynamically change your budget as your life circumstances change. Making your budget automated in this way means that you will stick to it. A time-sucking spreadsheet will make it too easy to fall off track.

Be Honest and Set Budgets Appropriately

It is important to be brutally honest with yourself and set meaningful and achievable budgets for each budget category. If you usually spend $400 a month on groceries, you likely won’t be able to whittle that down to $200 a month immediately. Shoot for $350 instead. Every little bit of savings helps.

When it comes to creating new and healthy habits, replication is the most important factor. The budget needs to be something you can stick to as well as improve over time. If you make it unachievable off the bat, you will get discouraged.

Gamify Your Budget

Life’s little luxuries can make it all that much sweeter. In fact, the research shows that treating yourself is important to happiness and self-care. But, how to do it when on a strict budget?

If you make budgeting for extras a game, it can be a fun way to work towards a goal to take that vacation or go to that new restaurant. You will be more likely to stick within your budget and make smart decisions if there is a big payoff at the end of every month, and you will always have something to look forward to.

Find Creative Ways to Save and Earn Money

You will be able to save more money every month and tighten your budget in each category by finding creative ways to save money.

There might be local discount grocers that can help you severely decrease your monthly grocery bill. A clothing rental service may allow you to halve the budget you spend on clothes for work. Finding new discount websites and coupon apps can help you save money on everyday items you were going to buy anyways

You can also make what you already own work for you. You might be able to rent your parking spot to someone, begin biking to work, or share your spare bedroom on Airbnb. All of these options will allow you to save and earn money, allowing your budget to be a little less tight.

Consolidate and Settle Existing Debt

It can be hard to save money if so much of it is going towards unpaid credit cards, medical bills, or other types of debt. A debt consolidation and negotiation service may be able to help you pay off creditors at a lower rate, either monthly or with a one-time payment. With your new budget in place, you will be able to have the funds on-hand to be rid of these debts once and for all.

Work Through Your Tax Debt

If you have unpaid tax debt that is piling up year after year, a tax debt resolution company will be able to help you get in good standing with the IRS and potentially save you money in the long run. Making hefty payments to the IRS or over-withholding doesn’t help your money goals, and it is important to invest in your future by hiring a team that knows what they are doing.

Always Put Money in Savings

After you achieve all of the above, it is important to make sure that you are budgeting for a savings account, as well. Life happens, and it is important to have money to be able to cover issues that may pop up from time to time without throwing everything else out of whack.

Even if you can only put a little bit towards savings every month at first, getting in the habit of making a safety net will pay off in the long run. You will save yourself money by missing late fees and penalties on everything from parking tickets to doctor’s bills.

Conclusion

It can be hard to save money and stick to a budget. But, if you focus on making it achievable, honest, fun, and meaningful, you will be able to stick to it. Ensure you leave no stone unturned by hiring the professionals to get your debt in order, and you will be well on your way to financial freedom.

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