*Updated for 2018.
Is budgeting easy? No. Is it a must? Yes. A solid budget, that you actually follow, is one of the biggest keys to financial success and stability. But like any chore that isn’t exactly exciting it’s very easy to avoid making – or sticking to – a budget at all.
The fact is though that it does not have to be as hard as you think (honestly) Here at LoanPig, we are rather good at keeping finances in order (we have to be) so we’re going to share our top tips on easy ways to budget to help demonstrate that it can be done!
Set Your Goals
If you can set a savings goal it can be a great motivator to help you ensure that you do actually make good on your promise to yourself to save. What that is is up to you. A house. A car. A holiday. But if you set a target to work towards the whole saving process will be easier and even satisfying.
Start From Scratch
Maybe you have a budget in place already. But is it really working? If the answer is no it’s time to scrap it and start from scratch.
Trying to force yourself to put money away isn’t always going to work, and in most cases, you will end up getting fed up, and probably end up spending anything you have saved up. If you can make a new savings plan, that doesn’t feel like so much of a painful sacrifice it’s far more likely you will actually stick to it.
Cut the Fat
Most people have at least a few expenses that, if they stop and think about it, can be cut to give them that little bit extra to put in their savings account. That habit of buying lunch from a fast food place during the week instead of bringing your own to work. Those app subscriptions in iTunes that you really never use but keep forgetting to cancel. And do you really need to buy the fancy coffee over the “tastes the same without the pretty packaging” version?
These all sound like small expenses but you’ll be surprised how much they add up to. Cutting them won’t be too painful and the money you save can be put to a far better use in your savings account.
Keep Track of Direct Debits
Direct debits make life a lot easier, or at least they are supposed to. The idea is that by setting them up you ensure that important bills are paid on time even if you are too busy to keep track of what you owe on a daily basis.
Unfortunately, that’s not quite how it works out for many people. Because they fail to keep track of what is due to come out when far too often they find their bank account overdrawn because they wrote a cheque for X, forgetting that Y was due and they would not have the money to cover both.
Get into the habit now of noting down the due dates of every direct debit (even very small ones) and then set up a reminder system (via your mobile is a good idea) that will alert you a few days before each is due so that you don’t make any more silly budgeting mistakes.
Prioritise Your Debt
Another important step when it comes to setting – and following – a budget is to prioritise your debt. Get it paid off as quickly as possible, so you’re not hit with any late payment fees, or a build-up of interest, and you’ll be in a far better financial position without too much extra effort on your part.
Whether you have a payday loan to pay off, or you are financing a car, make sure that you prioritize paying off debts that build up the largest amount of interest first. The sooner you pay off these, the quicker you can start saving more.
Every Penny Counts
Every penny really does count when it comes to successful budgeting. A few pennies and pounds here and there may not seem like a lot at first, but when it comes down to the long-term, you will find that they really do add up. Make sure that every penny is included in your budget, and you will find that you will be able to save a lot more in the long-run.
Focus On The Long Term
One thing that people forget about when it comes to budgeting, is what exactly they are saving for. If your long-term goal is to be a homeowner, but that new games console seems far more interesting in the short-term, it is important to try and keep grounded and keep your eye on the more distant prize. If you do not, then you may discover that your long-term goals move further out of reach every month.
Try to Earn a Little Extra
Yes, you are busy. Yes, your ‘day job’ takes up a lot of your time. But if your salary isn’t quite cutting it there are more ways than you might imagine to make a little extra on the side.
All those clothes you never wear at the back of the wardrobe? Try selling them on eBay. All that random web-surfing you do? Sign up for a service like Qmee and make a few quid while you do so. Again, these seem like small gains but every penny helps.
Adjust Your Budget As Things Change
As time goes by, your priorities will probably change, and your budgeting should reflect this change. If you’re going back to school, then you’re going to need to budget for that. If you get a raise or a pay cut, then you’ll need to adjust your budget to suit that too. Life changes generally mean changes to your budget, so it is important to keep your budget flexible and adaptable.