Do you dread looking at your bank balance and credit card statement each month? You definitely wouldn’t be alone on that one!
Financial stress is seriously debilitating and has struck as all at some point in our lives. It can feel like you’re sinking down a black hole of hopelessness, leaving you embarrassed and feeling powerless to do anything about it. “Budgeting” is a term that will always come up in any initial discussions around getting a handle on finances and reducing financial stress.
Budgeting doesn’t necessarily need to just be for people who have run into hard times- it can be for anyone as part of a healthy financial lifestyle and relationship with your money. It’s also a proactive stress-buster.
With so many tools, spreadsheets and resources available, creating a budget plan is undoubtedly the easiest part of the budgeting process. It’s the sticking to it that’s the hardest part, especially when you’ve been used to a certain quality of life that you now need to cut back on, in order to recover your debt.
It’s important to gather yourself and focus your activities and positive energies into recovery and sticking to the budget. A budget can feel much like a restrictive diet – with emotions playing a large part in the implementation of the plan. Keep your eye on the prize and remember – not all enjoyable treats and celebrations need to involve a large expense.
Tips for sticking to a budget:
1- Work out what you can save and research high interest saving options
Once you have done your budget and worked out what you can afford to save each month, set up a direct deposit so that it goes straight into a savings account automatically. This means that this money (however small) will go off your account each month without you needing to remember to transfer it. It will happen seamlessly and will mean that you’ll be saving gradually and regularly. Even small amounts each month can make a huge difference later on.
Research your options around high interest earning accounts to make sure that you get the most out of your money. You could also consult a financial advisor around other investment options once you have reached a certain level of savings.
2- Use cash for personal expenditure
Each week, withdraw cash for the expenses that you consider discretionary or “pocket money” – and use only that cash. You’ll find that the use of the cash, rather than the simple swipe of a card will make you more aware of the expense and how it limits you in terms of your available cash for the remainder of the week. It makes the concept of spending far more visual, too.
If you have a number of credit cards that you have debt on, it can be helpful to choose one card to pay off first (the one with the highest interest rate) and put as much money on that card as you can each month, whilst paying the minimum payments on the other cards. Move onto the next card, once this is done. Research your options around consolidating your debt.
3- Cut down on bad habits
Do you have some habits that you know are expensive and not necessarily the healthiest use of your money? For instance maybe those cheeky Wednesday catch-up drinks with the girls after work… they’re good for the soul and the conversations and catch ups are important however the three glasses of wine, two shooters and bowl of nachos at 11pm meant that you needed to take a taxi home and it all ended up in a $200 night. Cutting down to 1-2 drinks might be more appropriate for your budget, your head the next day, your quality of sleep and you’d still get your mid-week girly catch up fix for a fraction of the cost. Those mid-afternoon bars of chocolate could perhaps be replaced with a piece of fruit – far healthier and definitely more cost effective.
4- Involve your partner
If you’re in a relationship, make sure that you involve your partner in your discussions around money, your situation and your efforts and activities to cut back on spending. It’s important that it’s clear to them that you need their support and understanding. Look for free or low cost activities that you can do together that you still enjoy – instead of eating out every Friday, you could make a special and healthy meal at home together, for instance. Instead of going to the movies, you could go for a romantic walk in the Botanical Gardens that you’ve been wanting to explore for a while!
If you have joint accounts and your partner is in the same financial predicament, then it’s vital that the budgeting and saving is a joint venture – with both parties involved, accountable and working to their budget and end goal together. Check in regularly with eachother and help support eachother – it’ll no doubt be a huge benefit to your relationship to share the accountability and get back on track financially.
Keep your receipts to help keep track of your expenditure and to remember where you spent the money. Assess your budget plan each month and balance out your expenses to make sure that you are on the right track – especially at the start, when you are still getting into your new financial rhythm.
5- Analyse your expenditure
When you look at your receipts and your budget assessment, do you spot a trend? Maybe a way that you could reduce further, for instance those $15 daily lunches could be cut down to twice a week, with packed food from home on the other days? Perhaps taking the bus into work, rather than driving and paying high prices for parking?
6 – Allow for flexibility
Life is unpredictable. Be gentle with yourself and realise that some expenses will come up that you can’t foresee. If possible, you could even allocate a small amount of the budget to “Miscellaneous” to cater for those surprise costs or those months where you go a little bit over budget as you acclimatise to your new financial structure.
It’s important to remember that you indeed have the power to turn your budgeting situation around – it takes some planning and discipline however it is definitely do-able.