A survey of more than 2300 Kiwis, conducted by Canstar Blue, found that up to 59% of us (with variances region by region) don’t stick to a budget. Why are we following through? After all, why go to the trouble of writing a budget – and then not sticking to it?
The Canstar Blue research found that some of us just prefer to live day-to-day, from pay cheque to pay cheque, while others feel stressed and overwhelmed when dealing with money. It appears that many of us also feel uncomfortable when thinking too much about our long-term future finances, which includes learning how to do a budget.
How to do a budget: first things first
Obviously, the first key to sticking to a budget is to have one – and you can use our budget planner calculator to draw up a basic budget for yourself/your family. But, once you have a budget, how can you make sure you stick to it? Here are some tips on how to budget your money. If you’ve got a savings target in mind, whether it’s a specific sum, or a holiday, or a car; keep that in mind. It’ll be harder to overspend when you think about the fact that you’ve just put yourself $50 further away from your goal.
It will also help to track what you’re spending your money on, so you know where you are able to shave off some costs. It’s a great starting point for when you’re establishing how to do a budget that you can stick to. There are a number of ways you can track spending. For example, you can write down your spending in a notebook, use a money-tracking app, keep receipts and then add up expenses, or review your statements.
Budgeting advice site Sorted also provides some more tips on how tracking your spending can help you budget:
How to budget your money the realistic way
Here are some tips on how to do a budget:
1. The rewards method
Complete austerity can be hard (just ask the Greeks), so why not make rewards a part of your budget? You could structure it so that every fortnight, if you’ve stuck to your budget, you can take a small amount and buy yourself something as a reward for your diligence; it could be a bottle of wine, a piece of clothing, a nice coffee, up to you. Just make sure that you’re not taking so much that it nullifies your savings.
2. Put your budget everywhere
Now that you’ve sussed how to do a budget, turn the “out of sight out of mind” sentiment on its head. The fridge, your room, your desk at work…Those are just three of the many places you can stick a copy of your budget. By placing copies around your home and workspace, you’ll constantly be reminded of your budget, which will reinforce your will to save. A single copy of your budget sitting in a drawer somewhere won’t do you much good.
3. How to do a budget: being aware of bendability
The general idea behind how to do a budget is to be strict with your spending, but being overly strict, in some circumstances, can be more damaging to your budget then being extravagant. For example, if an unexpected cost comes up in the pay cycle, whether it’s a hospital visit, a broken household item needing replacement etc. you can afford to relax the margins on your budget a little to accommodate this expense. However the flipside of this is that if you receive a bonus at work or some other unexpected windfall, a significant portion of that should be going straight into your savings.
4. Ditch the plastic or at least make sure you’re on a low-rate card
The single easiest way to wreck your budget – and all the hard work you’ve put in – is overspending, and nothing makes that easier than a credit card. CANSTAR has some extra tips if you need assistance getting out of credit card debt. Why not swap in your credit card for a debit card, which has many of the same functions as a credit card, but only allows you to spend your own money. It may seem tough but not having a credit card will not only help your budget, it’ll help your spending habits in general. However, if you do find a credit card works for you and you are able to stay on top of your repayments, make sure you are getting the best rate.
A budget is a test of willpower – but worth it
Discovering how to budget your money – in a way that you actually stick to it – can be a real test of your willpower. But, if you can manage to do it, you’ll love yourself all the more for it. Follow these tips and you should have no problem keeping your spending in check, putting you one step closer to your savings goal.