Budgeting Tips for People Who Hate Budgeting
Table of Contents
If hearing the word “budget” makes you automatically think of penny-pinching and restrictions, you’re not alone. A lot of people resist the idea of tracking their expenses and budgeting their income.
But although budgeting is a pain, it’s even worse to be drowning in debt and not be able to pay your bills or retire. The purpose of a budget is not to make your life less enjoyable. It’s simply a way to organize your finances, so you know how much money you have coming in and where it’s going. It’s this clarity that will allow you to reach your goals more easily.
Before you start rolling your eyes and groaning, keep in mind that technology and a few tips can make budgeting a lot less stressful. The ones we will describe in this article work best if you have a relatively stable income and it exceeds your basic expenses. If your income doesn’t cover your basic expenses, you need more than a budget. You’ll have to find a way to increase your income, reduce your expenses or get outside help.
Don’t Call It a Budget
If you really hate budgeting, you could try naming the process something else, just for the psychological impact. You might feel more motivated to get behind something called a “wealth-building plan.”
You could also call it something related to a specific goal, such as a “dream home plan.”
Start With the Basics
When creating your budget, you’ll want to start by adding up your income after tax. Include your regular salary and any other income sources you might have, like side jobs, freelancing, alimony, child support, or benefits.
Then you can move on to expenses. The easiest expenses to calculate will be your fixed expenses, which include your rent and some of your bills.
Your variable expenses, as the name suggests, will vary. These include groceries, gas, some of your bills, and entertainment. You can see how much you spend on this category by looking at your credit card statements, but it will be harder to figure out what exactly. This means you’ll need to track your variable expenses for a couple of months.
Simply take notes using your phone every time you spend money on something, even if it’s as small as a cup of coffee. This is helpful because you’ll notice some small expenses that add up to more considerable amounts by the end of the month. These could be things that you don’t care so much about and could easily go without, but you never realized how much they cost until you tracked them.
The next step is to take a look at your debt payments. Here you’ll want to include student loans, auto loans, and credit card bills. If you have credit card debt on multiple cards where you make the minimum payments, it might be easier to keep track of if you took out an installment loan. Installment loans tend to have lower interest rates than credit cards, so you can use them to pay back your credit card debt, and then you’ll only have to budget for one predictable installment every month.
Lastly, to avoid getting into more debt, you’ll need to have savings included in your budget. You can start with an emergency fund you can use to pay off unexpected home or car repairs, medical bills, or any other similar expenses. Your emergency fund should cover your income for six months to one year. This way, if you suddenly lose your job, you’ll have a buffer to keep you out of debt while you’re sending out CVs and going to interviews. After you’ve saved enough for your emergency fund, you can start saving money for other goals like going on a vacation, buying a car or a house, and retirement.
Make a Budget You’ll Actually Want to Stick To
Whether you’re trying to pay off your debt, save money to buy a home or simply afford a certain lifestyle, you will need a budget. The problem is that most people try to create a budget only with the money they have left in their bank accounts at the end of the month. Unsurprisingly, if you don’t keep track of your spending, there’s rarely that much leftover.
A budget helps you see your spending patterns. You’ll be able to identify areas where you can improve so you can prioritize your needs before the money is already gone.
Many people who are not used to budgeting tend to switch from doing nothing to doing too much, and this over-budgeting makes them feel trapped and miserable. That’s why you absolutely have to make room for fun. Life is short, and nobody wants to spend it penny-pinching. As long as your basic expenses are covered and you set aside enough money for your long-term financial goals, it’s ok to spend on things you enjoy, like going to a nice restaurant or a vacation.
Having said that, it’s important to work towards becoming a more mindful shopper. Whenever you’re shopping, and you’re about to buy something, take a moment and ask yourself if you really need the item or you’re buying it out of impulse. If you decide you do need it, ask yourself how much value will it bring you and if that value matches the price tag. You don’t want to waste your money on things that don’t bring value to your life.
Don’t Beat Yourself Up. Reward Yourself!
You’re not going to be able to stick to your budget every month, especially in the beginning. That’s ok. You’re human. Focus more on your progress over several months. As long as your debt is going down and you’re gradually learning how to manage your spending, you’re on the right track.
To make life easier for yourself, use technology to your advantage and automate what you can. As you’re making progress in regards to paying your debt and you see your emergency fund increasing, reward yourself for a job well done. You could go to the movies, skip cooking and order takeout from your favorite restaurant or buy yourself something nice (but not too expensive).