If you’ve ever created a budget only to not stick to it, you’re not alone. Even with the best intentions, most of us have done the same thing. If your budget is too restrictive, it’s usually too hard to stick with it. If you don’t have a long-term financial strategy to go along with your budget, all your hard work might not pay off. In this article, we’ll go over tips to help you create both a budget and strategy to help you reach your financial goals.
Define Your Financial Goals
Before you can create a realistic budget, you need to define your goals. Are you trying to lower your debt overall, or are you trying to pay off student loans? Your goals set the stage for how you manage your money. Take time to define them before you take action. If you’re not making any headway in paying off your student loans, refinancing them is a viable option. You can combine all your loans into one and usually pay less interest over the course of the loan. Everyone’s situation is different, be sure to weigh the pros and cons prior to refinancing yours.
Have Realistic Expectations
You also need to have realistic expectations about what you can and cannot accomplish. If you’re trying to save money for a big large purchase, you need to set a timeline that you can meet. This will depend on how much you earn, your regular monthly expenses, and when you want to make the purchase. It’s also important to note that being too restrictive with your budget usually doesn’t work. Leaving yourself no extra money to enjoy even the little things, like lunch with friends or a coffee out, typically leads to failure. You need to give yourself enough money to enjoy life while working towards your goals.
Prioritize Your Goals
Another leading cause of budgeting failure is not prioritizing your wants and needs. You need food, clothing, and shelter, and you want a vacation or to buy a new car. You have to be honest in how you manage your money and whether you’re putting wants before needs. You should create a hierarchy of goals from least to greatest or vice versa. Saving for a down payment is different than trying to fix your credit, and your strategies should match your goals. Plus, this way, you can cross them off your list once you successfully achieve them. Visualizing what you want can also motivate you as well.
Use Money Saving Apps
There are also a lot of money saving apps you can download to track your progress. These apps can also show you how you’re actually spending your money. If you’re trying to use a 50-20-30-approach, specific apps will break down how well you’re doing and even provide tips on how to improve your spending habits.
Everyone wants to get more bang for their buck, so learning how to shop smarter can go a long way. Think about how you spend money and whether it aligns with what you’re trying to accomplish. If you have a habit of buying whatever you see in the grocery store, try making a list before you go. This can help offset impulse buying.