Sticking to Your Spending Plan
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As we talked about in Part 2 of our series, understanding the uses of money and creating a money plan that considers every category is important. But a budget is only helpful if you follow it, and sticking to a plan in the face of temptation isn’t always easy.
Here are a few tips for sticking to your spending plan so you can stay on the right path:
Be realistic with your goals.
Your lifestyle needs to match your income. You shouldn’t go into debt trying to live beyond your means. But by the same token, don’t budget so conservatively that you leave zero room for fun. Are you really okay with eating beans and rice every day of your life? Is it reasonable to expect that you need only enough gas to drive to work and home, without ever leaving your house otherwise? You have to be realistic or else you won’t stick to your plan.
Learn to trim variable expenses.
Food, entertainment, clothing, household items, etc. are areas of your budget where you have the most flexibility. If you need to make room in your budget by cutting costs, variable expenses are the first place to look. Can you cut your food bill by learning to cook from scratch? Instead of an expensive night out with friends, can you invite them to your house for a game instead? What about going on a nature hike instead of shopping for fun?
Boost your income where you can.
It's good to have a little wiggle room in your budget. If you truly have no expenses you can cut, it’s time to look at ways to earn a bit more money. Can you take a weekend job or pick up a side hustle? That can help a lot, especially if you’re able to put that money aside in savings. Just be aware that self-employment through a “gig” can change your tax liability, so do your research about what you’ll owe so you’re not caught by surprise.
Start saving right away.
One of your first goals should be setting up an emergency fund to cover surprise expenses, like car trouble or job loss. Even if you can only add a few dollars a month at first, saving a little is better than saving nothing. Consider maintaining separate savings accounts for different purposes, and choosing the best savings vehicle for long-term and short-term goals.
Budgeting isn’t hard, but it can take some practice. The sooner you start, the better you’ll be. If you have questions or are curious about our Money 101 program, reach out to our financial advisors at (888) 815-5100, or explore some of our other resources on our site.
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