Why Being on a Budget is the Easiest Thing I’ve Done

Although most everyone knows they should have a budget, actually living on one presents a challenge for many people. They believe they don’t need one because they watch what they spend, or they simply don’t want to make the necessary changes to their spending habits. A lot of people even believe it is just too hard, so they don’t even start. The reality is, being on a budget can be very easy, once you learn what works for you.

Automation

One of the biggest tools of success in a budget is the automation of your finances. This means online bill pay, automatic transfers to your savings account, etc. Instead of manually tracking and paying each bill when it is due, automation can really help ensure your budget success. You can automate things like your rent/mortgage, subscription services (gym, streaming, etc…), and monthly bills like cell phones, insurance, and car payments. Automating even your savings allotment can help ensure that money does not get spent, but rather goes straight to savings. Many employers, as a part of your direct deposit options, allow for the choice to split the direct deposit between multiple accounts. This is a great way to send money to savings without even thinking about it.

Systems

The second biggest tool we recommend is a “spending limitation” system for yourself and your family. In other words, come up with some sort of system that will not allow you to spend more money than you have budgeted for the month. Many people recommend cash envelopes for this, as you pull out enough cash every pay period to cover your expenses for that cycle. Then, when the envelope is empty, you’re done spending until the next pay period. This system helps build discipline in spending habits and forces you to make choices about the things you are purchasing.

For example, it forces you to visually see the money you are spending, and realize that if you spend that $20 bill now on dinner out, you will not have it available next week for drinks with friends. For us, we use a similar system, with bank accounts. We have a bank that allows us to have free checking accounts due to our relationship with them, so we have close to 14 different bank accounts (checking and savings), and each one has a “nickname”. Each paycheck, money is automatically transferred to the appropriate accounts. We can see exactly how much is available in that bucket, and can make spending decisions accordingly.

Tracking

The final tip for success we recommend is using some type of tracking system for your budget each month. Whether it be saving all your receipts, keeping a spending log, or using a digital software that automatically tracks your purchases, you should use something. This will keep you accountable to yourself and your budget, and can also help you identify any “leaks” you have in your personal finances. Leaks are things that are draining money away from your financial goals, but in a very sneaky way. A $5 coffee here, drive thru lunch there, etc. By tracking your purchases, you can learn more about your spending habits, and ensure you are staying within your pre-set budget.

These are our tips for success with following a budget. These are all things we have implemented into our personal budget, and they have helped us stay on track. What has allowed you to be successful in your budget? Or what tip above are you going to implement? Let us know in the comments below.