You might recoil at the thought of living within your means, assuming this will be a stressful and unhappy lifestyle. However, living on a budget need not be an unpleasant habit.
Learn What You’re Spending
Budgeting can be challenging until you learn about your current spending habits. Keeping a daily log for around a month will give you the information you need to create a workable budget.
Record every dollar spent for a short while. You will be amazed at the small amounts of money you spend that add up to much larger dollars. For example, that large exotic latte you buy to start your workday may cost only $2 more than a normal cup of coffee. However, you’ll lose at least $10 per week in unnecessary expense.
When you see this “little extra cost” repeated with other items, you’ll learn what you are really spending and where you can cut when necessary. You can now create a stress-free budget.
How to Avoid Budget Creation Problems
- Adjust your attitude. Don’t view living on a budget as a restriction on enjoying your hard-won income. If the word “budget” bothers you, use the money saving expert trick. Call it your “spending plan.” Feel good about the fact that you are finally controlling your money.
- Create a budget “your way.” Whether you are a traditionalist who prefers pencil and paper, or wish to use one of the many online tools that allow you to set up online budgets, do it your way. This is more comfortable and less stressful.
- Use the KISS (keep it simple, stupid) theory. Don’t make budgeting harder than it need be. Keeping it simple is more effective and useful than designing a budget suitable for General Motors or IBM.
- Build in some flexibility. Don’t paint yourself into a corner, with no escape. Allow for mistakes and build in some rewards for yourself. Remember, prices for things can rise. Allow yourself to make changes free of guilt or worry.
- Set goals. You’ve been told since you were young to set realistic goals. If you’ve waited to develop this habit, start now. Living within your means is much easier when you have one or more goals in mind for your budget. Think about your priorities and integrate them into your spending and saving plan.
Should your budget be very inflexible or tight, think about ways you might increase your income. There may be some ways to improve your income that are painless and effective.
Understand that living on a budget allows you to manage smaller, repetitive expenses to permit you to afford better, more expensive things in the future. You’ll not only be stress-free, but you’ll enjoy life more.