Tips to Stay Budget Conscious

You’ve drawn a budget in the past but find yourself unable to stick to it. You’ve reached the end of the rope, trying multiple new ways to be conscious of your spending and savings. There is nothing more you seem to be able to do to improve the way you stick to your budget. Sound familiar?

With increasing costs and an inability to save as much as you require, there is a clear need to budget your finances and stay conscious of carrying it out.

A budget helps bring order to your finances and draws clear guidelines for spending decisions. Budget-based choices, when repeated with consistency over time, will bear the fruit of increased savings while not sacrificing spending on the things you love. It’s forming those important habits that make you budget conscious. It’s the repeated discipline that will be the difference-maker in hitting your budget goals.

Let’s get started!

Know your current situation:

Before starting any budget plan, you need to get a full picture of what your finances really look like. You might not realize how much income is coming in or how much you’re actually spending each month. A nice way to get a visual of your money is using a simple Excel spreadsheet. Without making it too complicated, you can divide it into two sheets: income and expenses.

Further break this down into categories like monthly spending and annual spending. Drill down further with sub-categories or types like job income, rent, groceries etc. Once you enter every financial detail, you’ll be able to get a clear picture of your finances.

Analyze your data:

Before planning, it helps to do an analysis of your financial situation and understand where things are going wrong. Are you spending more than you’re making? Where is your money going? Are there any surprises about how much you’re spending in a particular category?

As you take note of your savings shortcomings, also take note of which expenses you could aim to reduce. Calculate what reducing your expenses by even 5% would do for your savings each year. It might be quite motivating!

Set goals:

Now it’s time to set goals. Know what you want first then determine how to get there. Do you want a certain amount saved in a year? Five years? For retirement? Do you want to eliminate all short-term debt like credit cards or a car loan? Add your goals, both short-term and long-term to your spreadsheet. Make sure to attach a timeline for each. “I want to reduce my credit card debt to $0 by October of this year.” Writing down goals and attaching deadlines will help you focus and commit.

Your goals should be realistic so they’re attainable. Setting a lofty goal you’re unable to achieve will be demotivating. Set yourself up to succeed, not fail. If you’re not sure where to start, set a goal to add 5% to your income/savings and reduce 5% from your expenses. Begin with cutting down on needless expenditures and pushing the limit of what you think is ‘necessary’ as a spend. The expense dollars you eliminate can be added to your savings or used to reduce short-term debt, depending on what your goals are. Every action you take should be aligned to your goals.

Be disciplined:

Now comes the toughest part – having the discipline to stick to your budget goals. More than analysis and planning, discipline and the will to follow your budget plan will determine whether your budget bears fruit.

Linking your planning to your daily life and applying the results of your analysis to form current habits are key to maintaining discipline in following the budget:

Set reminders to hit your daily or monthly goals from your plan and ensure you see them every day. This will build the discipline to stick to your budget in the face of temptation.

Check the plan every day, or once every two days. Ensure that progress is made towards achieving it, and that it is also consistent. This will embed the numbers in your mind and help you out when you make key financial decisions.

There are countless budget tracker apps and pre-designed worksheets that can help. Not just that, you can connect these goals to your calendar, or other mobile apps to ensure smooth functioning of your budget.

Ensure it can be tracked:

The final, and perhaps, the most important, way to be conscious of your budget is to ensure your plan can be tracked. While you can have the best plan, detailed analysis, and strict discipline, none of these will manifest without tracking everything. Tracking your income/savings and spending is the single most important method to be budget conscious, and it links everything else from planning to discipline.

In a way, being budget conscious is a state of mind, something you must adopt through repeated practice. It is found in the steps mentioned above but mostly it is found in your awareness, in the moment before you make any financial decision. Focusing on what you want and knowing small daily steps can help you achieve it can make budget consciousness a way of life. If you need some initial help with your budget plan, let us know!