Today we have a post contributed by Michelle B., a financial and contemporary writer. Today’s topic is budgeting, which in my opinion, is a crucial element when trying to properly manage your finances. But Michelle offers some great advice as budgeting is definitely something I think everyone can improve on one way or another. Enjoy!
So, like every year, you’ve failed to meet your budget challenge in 2014. You’re thoroughly disappointed but you’re far from giving up hope. You really want to meet your goals and win the budget challenge this year. The only problem is, you don’t know what exactly it takes to meet this budget challenge.
Okay, don’t panic or lose any sleep over this frustration. Rather, just take a few minutes to read about my solution to all your budgeting woes.
What does it take to meet your budget challenge in 2015? Let’s accept it. It is really tough to handle a budget challenge like a pro.
Sometimes, it tests your patience to such an extent that you feel like almost giving up this challenge. But, you can’t afford to ignore this challenge as budgeting and living within your means is the very foundation of personal finance. So, what should you actually do to successfully handle this challenge in 2015? Well, first and foremost you have to find out what went wrong in 2014.
Here are 4 main mistakes that people make when budgeting. See if any of these describe your efforts last year.
1. Creating a totally unrealistic budgeting plan
A gigantic and unrealistic budgeting plan is difficult to maintain. If you create a budget wherein it’s hard to edit, upgrade keep track of up expenses, then what’s the use of that budget? A basic budgeting spreadsheet or a mobile application is enough to manage your personal finances.
2. Leaving emergency expenditures out of the equation
Unforeseen expenses can come up at any time. It’s unrealistic to expect that everything will always go as planned. So, it is crucial to create a separate category for emergency expenses in your budget. If you didn’t and had to deal with a sudden expense, then quite naturally your savings were completely exhausted. This in turn made a bad impact upon your budget.
3. Living as you wish and overlooking your budget
This is a major problem in society. With the increased dependency on credit cards, people have almost forgotten to live within their means. If they need to buy any product, all they need to do is, browse Amazon, select the product, place the order, give their credit card details and submit the shipping address. If you’re a shopaholic with no limitation or self-control, then it’s very likely you blew your budget in 2014.
4. Keeping core members out of the loop
Unless you live alone, failure to co-ordinate with other members of your family can break your budget. You need the support of other in your life to ensure you stick to your budget and be held accountable. If you didn’t, then you know why you couldn’t meet your budget challenge in 2014.
What should you do in 2015 to meet the budget challenge?
Now, that you’ve got an idea about the probable mistakes you did in 2014, it’s time to make a fresh game-plan. Here are a few ideas that may help you finally succeed in 2015 and meet your financial goals.
1. Take your budget with you wherever you go
Unless you have a very sharp memory, it’s almost possible to record your small expenses throughout the day without making note of them. So, after you’ve created your budget, make sure you take it with you whether it’s on your phone, notepad, a collection of receipts, etc. The smartest option is to use a budgeting app if you own a smart-phone. You can record even the tiniest expenses 24/7. Think means you don’t have to guesstimate expenses at the end of the day.
2. Stay focused and review your goal
You’ve already established your goal. You’ve created this budget to fulfill your short-term and long-term goals. Make sure you don’t forget about the bigger picture behind your budget; financial stability. If you do, then you’ll lose the motivation and determination to follow your budget. You simply won’t have any drive to stick to your budget.
Review your goals to stay motivated. Every time you think, “this is over”, just look at your goals and the bigger picture once again.
3. Choose the right spending style
There are 4 types of spending styles – (a) abundant spending, (b) neutral spending, (c) scarcity spending and (d) avoidance spending. Choose the spending style that helps you meet the budget challenge this year.
4. Shop with a skilled saver
Do you tend to shop for comfort or make purchases out of impulse more than necessary? If yes, then shop with anyone with good saving skills. This will help you resist your impulses and learn good financial habits as well. For instance, your skilled saver can suggest the ways to meet one-off expenditures smartly. This will really help you take a one step ahead to win this challenge.
Don’t get frustrated if you fail to win the budget challenge in 2015 as well. Failure is the pillar of success. So, you may become more driven to achieve your goals in 2016. Whatever little mistakes you happen to make this year, you’ll surely learn from them and try to take the right steps moving forward. Good luck!
Stop Worrying About Money and Regain Control
Ready to regain control of your money? Take the first step with this free starter pack which includes:
- 2 Monthly Bill Calendar templates
- 1 'Start Paying Off Your Debt' Checklist
- 1 'Drastically Cut Your Expenses' Checklist