We’re all on a budget these days. Things may be better since The Great Recession, but few of us are swimming in extra cash. Plus, a lot of us are still a bit shell-shocked from those lean years and aren’t so quick to start spending cash even when we have it.
But sticking to a budget doesn’t have to mean that you never go out to enjoy a meal at a nice restaurant or that you never treat yourself to those home improvements you want. You can still have those custom cabinets you’ve been dreaming of without feeling guilty! You just need to know how to budget properly and how to stick to your goals.
Here are a few tips for how you can maintain a strict daily budget while still giving yourself a little room for those extras (both small and large):
Identify Spending Goals
Budgeting can seem like a bit of an abstraction if you don’t know what you are going to do with those savings. Are you saving just to save? If so, that can fail to motivate after a while. But are you saving to spend a month on the Italian coast? Then you can have a specific money goal in mind, and you’ll be very motivated to stick to your budget and put aside every dollar you can for that goal. Visions of a cocktail in hand and crystal blue waves in front of you will keep you going.
Identify both short- and long-term spending goals for a portion of your savings. Don’t get carried away. Just focus on a few things at a time. You can do the renovation or the beach vacation this year, but not both. It may even take you a couple of years to meet the goal. But just focus on one major goal at a time and maybe a handful of smaller goals, like buying those new boots you have your eye on or getting a new couch.
Put Your Budget Into Categories
You can be on a budget and still have some fun money. You just need to allocate how much money will be used for that purpose in your budget. Then you can have the freedom to spend it however you like, whether that’s on expensive lattes and avocado toast or new shoes.
Of course, your “fun money” category can’t be too big compared to other categories like “groceries” or “utilities.” But you can give yourself a small stipend for entertainment or frivolous spending without feeling guilty. Just be honest with yourself about how much room you really have in the budget while still meeting your savings goals.
Track All Spending
You may be surprised to learn where you are spending money. You may not think that you are eating out that much, but once you add up all your receipts for the month, you may be shocked to see that you spent hundreds of dollars going out to lunch with co-workers. If you are going to get your budget under control, you need to keep close track of exactly how much you are spending and where.
Review your expenses each month, and compare those expenses to the budget you have set for yourself. Are you going over on a category? If you are, you need to think about what changes need to be made. Are you going over because you underestimated expenses, such as how much electricity you use? You may need to adjust your budget. Are you going over because you aren’t paying enough attention to your purchases? You may need to start leaving your credit card at home or packing your lunch more often.
Sticking to a budget doesn’t have to be a dreary or self-flagellating affair. You can still enjoy the things that you want in your life. You just need to be honest with yourself about how you are spending your money, and you need to identify goals and a path for meeting them. Then you can enjoy that vacation and feel good knowing that you have what you need in savings.
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