by Susan Paige
CNBC recently reported that the average consumer spends $143 more than the average weekly budget, which suggests most of us are not sticking to our budget. If you have a budget that you’re not sticking to or have yet to make one, this masterclass is for you.
We explain what a budget should be like, secret hints to help you stick to one and more. This is your budgeting masterclass in a post-pandemic world.
What Is a Budget?
A budget is a document, typically a spreadsheet, that outlines your income and what you have to spend each month on essentials. From the information, you can create realistic short and long-term savings targets or make a plan to pay back a loan or get out of debt.
You can make a budget by grabbing a pen and paper, opening an Excel file and using a calculator. But if you want to save time, a free template can be downloaded here, courtesy of Wonga.
What Are the Benefits of a Budget?
The overarching benefit of a budget is that it creates a financial roadmap to a specific goal. Even if you don’t have a financial goal in mind, using a budget is still an advantageous way to stay on top of your day-to-day finances.
The unseen benefit of a budget is how it makes you feel. If you are struggling with credit repayments or trying to get out of debt, a budget can be a source of calm. It provides clarity in a confusing and anxious time, and can be used to negotiate repayment plans to make any credit repayments more affordable.
Our Top Budgeting Tips
We started this post explaining how so many people are failing to keep to their budget. Some psychologists suspect that the reason we struggle is that we associate the word ‘budget’ with negative experiences. A bit like how we associate the word ‘diet’ with not eating what we usually crave, the word budget means not buying that dress we saw online, even if it’s half off.
You can overcome this by putting images around your home of the items and experience you’re saving for. An example is a photo of your dream home. But that’s not the only budgeting tip we have for you.
Remember to monitor the budget continually. Not analysing and adjusting your budget over time is a mistake. The best reason for doing so is to find new motivation to keep saving. If an athlete never gets a pat on the back and a clap, they might never know how well they performed. The same applies to getting accurate feedback from your budget.
The Secret Way to Stick to Your Budget
Our top-secret way to stick to a budget is to start using cash instead of your card. There will be some things you may have to pay electronically, like bills and such. But there are plenty of things you can stop using your card for, such as groceries.
Living a cash-based lifestyle will make you a little more connected to your finances as you’ll be tangibly parting with hard earned cash rather than playing with a digital concept. This will help prevent unnecessary ad-hoc spending. Give it a try and see how much better you are at sticking to a budget.