Living on a budget sounds so restricting. As soon as you hear the word budget what do you think about? You may think that budgets are for people who are poor, for people who are broke or for people who have a lot of debt. The truth is everyone – no matter how big or small your net worth is – should learn to live on a budget.
Living on a budget just means that you track your spending and saving and set limits to ensure you can afford to achieve all of your financial goals. Now doesn’t that sound fun.
A lot of people think that living on a budget means not using credit to live. When you get paid you pay your bills, buy food and spend the rest. That’s not exactly budget living, it’s called living paycheck to paycheck. Although it’s not an ideal situation living paycheck to paycheck is better than living in debt.
You’ll notice that there was no mention of savings in that equation. If you want to afford your life, pay your bills and save for all your goals then you’ll need a budget.
Here are six ways to set a budget and stick with it:
Make paying off debt a priority
Put your debt into your budget, that’s the only way to get it paid off quickly. If you currently pay your bills and put whatever you have left onto your debt you are making progress, but it’s probably not enough. Making minimum payments onto your student loans, credit cards and lines of credit doesn’t help get them paid off quickly.
Allocating a part of your income towards paying off debt helps get your debt paid off as quickly as possible. Getting debt paid off helps save on interest charges and then you can use the money for something else.
Make sure the amount you allocate towards debt is more than the required minimum payments and that it also fits comfortably into your budget. The last thing you want to do is to make higher payments than you can afford and end up using credit to make ends meet. That would be counterproductive.
Set spending limits on expenses
Take your income and use the 50/30/20 budget rule to help set spending limits. This rule helps ensure you’re living, spending and saving all at the same time. It makes sure you can afford to do everything you want.
Maybe you won’t be able to afford the biggest cable package, but you will be able to afford your summer vacation. Setting a budget is all about setting spending priorities. You can spend a little more on one thing if you spend a little less somewhere else.
Avoid buying name brands
Shopping at traditional stores in malls can be expensive, mostly because you’re paying for the name on the label. The exact same thing is true for shopping at big name grocery stores. Scanning apps, websites and flyers can help save money and cut down the costs of everyday necessities, but if you really want to save money think outside the big box store says US Money News.
“Shop at all the right places. The Economides use a number of traditional hotspots for snagging deals, such as garage sales, church rummage sales, and consignment shops.”
Cut down expenses if need be
If you cut out expenses your budget can be restricting and therefore you may not stick to it. My advice is not to cut out expenses, just cut down. Skip a lunch out with co-workers, workout at home instead of an expensive yoga class and enjoy Netflix for $8 a month instead of a $150 cable package.
Oh and don’t forget the cell phone, contact your provider to see if you can save money on your monthly bill by cutting down services you don’t need.
Leave the cards at home and stop spending
This is kind of like tough love for your wallet. If you want to quit spending and save money then leave your money at home. Take your debit card and your credit cards out of your wallet.