Thousands of people start a budget, but quickly give up because they get discouraged. They feel like a failure because they went over budget their first week or they feel too constrained by their budget.
With no results, they toss their budget in the trash and think, “Budgets work for some people, but they don’t work for me.”
Budgets can work for anyone. But there are a few secrets you need to know to make them work for you.
3 secrets to Successful Budgeting
1. “Failing” to meet your budget isn’t failing
This may seem weird to think, but meeting your budget isn’t the purpose of a budget. In some ways, it’s good that your budget shows that you’re spending too much in an area.
Whenever you go over budget, it tells you something you didn’t know. Maybe you planned to spend $80 on groceries every week, but you end up spending $100 per week.
Don’t despair. This is an opportunity to learn.
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What does this teach you? Maybe it means you underestimated how much money you need for groceries. In that case, you need to allocate more money to this category and lower costs in other areas.
Or maybe it reveals you spend too much money on groceries. If so, you need to research tips on saving money. Next week you can try off-brand products and couponing.
One reason we create budgets is to discover where we’re spending too much money. There’s no “failure” in not meeting your budget. It’s part of the process.
2. A budget is a mini financial advisor
We don’t know ourselves very well. We don’t know why we’re upset until we journal or talk to a friend. We don’t know our diet or sleeping schedule until we record the data and look at it.
That’s what a budget does for your finances. It helps you see your spending habits and makes suggestions for improvement. But your budget can feel like a financial prison if you think of it the wrong way.
Your budget isn’t a mean, old teacher wagging his finger at you. Think of your budget as a warm, friendly financial advisor. Picture Bob Ross or Mister Rogers explaining how you’re spending your money and giving you tips on how to save.
Let’s say you realize for the first time you’re spending $300 a month on streaming services. You slap your forehead — that’s where all your money is going. So you cancel a few subscriptions.
That’s your budget giving you financial advice.
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3. Budgets are adjustable
Budgets can and should be adjusted. There are a lot of reasons why budgets need to be revised, especially if you’re just starting.
For one, you won’t accurately estimate your spending with your first budget. It may take a few months to get a feel for how and where you spend your money.
But even after months of adjusting your budget, you’ll still have to make revisions. You’ll quickly find that prices change in different areas of your budget throughout the year. For examples,
If you celebrate holidays or go on vacation in certain seasons, your budget will look very different during these months
Your heating bill is higher in winter than in summer
Depending on how you do taxes, tax season will have a unique budget
One of the simplest ways to prepare for these odd expenses is to be willing to change your budget.
Additional tips: Prepare for unexpected expenses by creating an emergency fund. And give your budget a “miscellaneous” category in case you need more wiggle room for higher costs.
Budgets can work for you if know the secrets to make budgeting successful.
Your budget is an ally who helps you know yourself better and gives financial advice. Be willing to make adjustments and don’t feel bad if you don’t make your budget every month.
Apply these secrets and budgeting will be a productive joy instead of a dreaded task.