Saving and spending practices are embedded behaviors that create habits over a period of time. Healthy saving and spending habits create space for financial wealth. While unhealthy habits create stress and slow financial progress. One of the best ways to stay on track of both your saving and spending is to create a budget that fits your lifestyle. Everyone’s finances are different therefore every budget should be personally tailored.
When creating a budget start with one months’ worth of expenses. Work ahead of the next month to write down all of your financial responsibilities. Start with your income for the entire month, then set categories to pay all of your financial obligations. This should include your monthly rent or mortgage, utility bills, phone bill, debt payments, groceries, and gas. Plan for unexpected expenses as well. You may not be able to save a large amount at first but it is important to start building a savings just for emergencies. This way if you are financially caught off guard you will be somewhat prepared.
Every dollar counts; things like birthday parties, vacations, and even retail shopping should be included in your budget. Giving yourself a set limit to spend creates boundaries. Once you create these financial boundaries you will be more inclined to not cross them.
The very first thing you should budget for is yourself. Paying yourself first is investing in you. When setting a savings goal make sure it is something you will be able to commit to. You do not want to set a goal that is unrealistic. This could create disappointment if you have to dip into your savings for unforeseen reasons. Start with a percentage that feels comfortable for you and increase that amount each month. This is a savings exercise that will eventually build savings strength for overall savings health.
When you first begin budgeting, you are at the beginning stages of creating a new behavior. It will take time for this behavior to become a habit. You will want to be patient with yourself and give yourself grace with spending mistakes. During the first few months of budgeting, pay attention to everything you spend. Write it all down so nothing is unaccounted for. At the end of the month review those dollars that were spent out of budget. Add up the total amount and see how much was leaked from your budget. The next month try to decrease the amount of times you step out of your financial boundary.
We have to first understand where money may seem like it’s disappearing. When we identify where these leaks are happening and how they impact our budget, we can then start to make the necessary corrections.
If you have never created a budget before it is perfectly OK to ask for help. Your financial institution may be able to sit down with you to help create this budget. There are also budget calculators that can be used at home and on the go. These will help you to stay on track. Creating a budget for yourself is you creating a plan of financial success for future you. Plan ahead of the upcoming month, factor every dollar earned, and categorize where money should be saved versus spent. Ask for help if needed and start today!