4 Great Budgeting Tips You Should Know

iQuanti: To many people, creating a budget means financial restraint. It means you may have to cut back on going out to eat at restaurants or avoid buying those new shoes you’ve been eyeing. But the purpose of budgeting is not to keep you from buying the things you want, but to help you prioritize what’s most important. Here are four great budgeting tips you should know as you’re creating a budget.
Tip #1 – Define your goals
It can be easier to stick to a budget when you have a clear idea of why you’re doing it. So, before you build your budget, take some time to define your goals. Here are some goals you may have:
Make a list of goals and use that as a reference on the days when sticking to your budget feels especially challenging.
Tip #2 – Be realistic
When creating your budget, be realistic about how much you’re currently spending vs. what you’d like to spend. For example, let’s say you regularly eat out most nights of the week and spend $500 each month at restaurants. Setting a restaurant budget of $100 in month 1 may be too restrictive for you to be successful.
Instead, consider starting out with a restaurant budget of $450, then $400, and so on until you feel that your budget is at a reasonable place. Trying to swing for the fences the first time around may only leave you feeling defeated when you blow past your monthly budget in the first week.
Tip #3 – Create a “miscellaneous” category
Each month brings new surprises. And while some events, like established holidays and birthdays, arrive at the same time each year, others, like the kids wanting $20 to go out with friends, are unanticipated.
Create a monthly buffer category called “miscellaneous” to use for these ever-changing monthly expenses. Doing so will relieve the stress of going over budget to buy a birthday gift for a friend.
Tip #4 – Budget for fun
Budgeting can sometimes feel like it takes the fun out of spending money, but not if you set aside some funds for things you enjoy doing! Create a budgeting category for fun that includes money for visits to local parks, a trip to the movies one weekend a month, or whatever activity your family enjoys doing. By putting a line item for fun upfront, you can say yes to more fun things throughout the month without feeling guilty for spending money.
The bottom line
Budgeting doesn’t need to be restrictive if you do it properly. Be sure to define your goals, be realistic when you create your budgeting categories, use a miscellaneous category, and don’t forget to budget for fun. By implementing these 4 great budgeting tips, you’ll be able to create a budget that works for you.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.
Source: iQuanti, Inc.