With a few tools and habits in place, you’ll find that it’s not difficult to stick to your budget. Here is what you can do:
• Pay your bills at the same time. Even when you have multiple due dates on your list, it never hurts to pay early. Schedule your bill pay sessions immediately after your pay periods for the month, and pay them all at once. You’ll simplify tracking for your budget, avoid late fees, and feel immediately secure that your fixed expenses are taken care of.
•Save your receipts and track your cash. Hold on to your receipts, and keep notes on your cash expenses. Even when you use your debit or credit card, some expenses can take a while to show up on your online statements. With receipts or notes on hand, you’ll be able to find your current balance at any given moment.
•Use a budget spreadsheet to track your spending. On a piece of paper or a spreadsheet document, list your categories, such as fuel, groceries, dining out, entertainment, personal items, household, gifts, etc. Make sure this list is tailored for you. In the next column, add your budget targets. To the right of your targets, you can draw a grid, and whenever you spend in a particular category, you can add that expense to a box on the category line.
With this spreadsheet, you can periodically check to see whether you are coming in under budget, by adding up the boxes on the category line, and comparing them to your target. You can carry this list around with you in your wallet as a reminder, or you can update your spreadsheet every week to see how you’re doing. When this kind of attention becomes a habit, it’ll become much easier for you to consistently come in under budget.
•Use financial software. A personal finance program like Intuit’s Quicken can simplify things, by eliminating some of the legwork and manual calculations involved. Quicken allows you to download transactions from your financial institutions, or enter them manually, so you’ll have an easier time tracking your current balance. You can choose a budget category for each transaction, and Quicken will total the amount of expenses in each budget category when you decide to pull up a report.
•Try using cash. If you find that you are frequently overspending, in spite of laying out a budget, it could help to use cash. If you put away your credit and debit cards, you can’t be tempted to use extra funds and spend over your budget. There is another good reason to use cash: that money in your hands can be harder to part with, compared with a card. You might be much more attuned to its value and its limits, when you can count how much you have left for the month.
Split your discretionary spending fund into the number of weeks in the month, and try carrying enough cash to cover that week. You can’t overspend if you don’t have the means on hand.
•Remember to reward yourself. Leave some room for fun in your budget. Try shifting fun money toward the end of the month or pay period, so it doubles as your reward for sticking to your budget. It’ll keep you motivated and keep your budget sustainable
Michael Camacho is the president and chief executive officer of Personal Finance Center. He has more than 18 years experience in retail banking and with financial institutions in Guam and Hawaii.