Calculate & Categorize Your Spending 14 Great Budgeting Tips
Our top tips will help you set up a budget and develop a long-term strategy for managing your money like a pro.
Something that all of us, at some point in our lives have probably wondered about is how some people get it right and, actually make it seem very easy, to accomplish financial freedom. Regardless of whether you're a college student or are at the peak of your corporate career, it all comes down to how effectively you manage your money.
Budgeting tailored to your lifestyle
For some people, budgeting might be a hard thing to do, but the truth is that it's actually very easy and anyone can do it. If you want to budget the old way, all you need is a diary or notebook and, if you prefer more modern methods, you can make use of an Excel table or a range of online or mobile tools. Like mentioned above it is very easy to start budgeting, provided that you are committed for the long run.
All you need to do to start, is you need to add up how much money you earn every month as well as how much all of your expenses are at the end of every month. This will clearly show you whether you will have money left or whether you are spending too much.
How you budget is completely up to you, and it also depends on how you live your life and what you want to achieve both in the short term and the long term.
Income matters less than how you save
It is very important that you try your best to save a little, no matter how big or small your income might be because there will come a time when life will give you an unexpected blow. This is where your savings will come in handy and will ensure you do not have to rely on personal loans or family and friends to help see you through.
So if you are one of the few lucky people who are able to save money, then you might recognize these tips or they could be of interest to you. But if you find that you are spending way too much every month and are unable to save, then these following tips might just help you.
1. Be honest about your spending
You should always be honest with yourself when it comes to tracking your spending.
This means that you should sit down and go through your monthly expenses to see where you could have saved money. For example: going to the movies instead of rather watching a movie on TV, eating out, and water you wasted unnecessarily...you could even take a look at your current loans and perhaps negotiate a better rate. A good idea would be to review your car loan and see if you can get a better rate or a shorter loan term to save.
Identifying needs versus wants
Also be truthful about the things you NEED (e.g. food, toothpaste…) versus the things you WANT (e.g. new designer clothes, music concert tickets…). Differentiating between the two is key to saving incredible amounts of money
2. Cutting back on bad habits
We all have bad habits, some are more destructive than others but all bad habits cost money.
Cutting back on bad habits such as drinking, smoking, partying etc. may not be easy but, it will be worth it in the long run.
Progress not perfection
You don’t have to stop all at once, but cutting back by not drinking and partying every weekend or smoking every day will help you save money. And your health will also benefit from this smart choice which will empower you to do better and earn more money.
3. Save first, spend second
Before you pay bills or start spending money, you must first save.
If you have a goal that you are working towards, then this will be easy for you.
Whether you simply put away a certain amount of money before you budget or add a set amount of savings to your monthly budget, saving must take priority over all else.
Automate your savings
In fact, you should take advantage of automatic savings systems and debit orders which will transfer a set amount of cash to your savings account on the same day that you are paid.
A good idea would be to have a separate savings account which you cannot easily access or meddle with while doing your everyday banking.
4. Pay with cash
For some people, this might be difficult simply because they have become accustomed to just swiping when paying for something but, it's the best way to save.
But the disadvantage to this is that you can so easily lose track of all your spending, especially if you are enjoying a night out on the town.
Why paying with cash is better
The advantage of paying cash rather than debit or credit cards is that you can keep track of exactly how much you are spending and when you've reached your budget limit you will know because you simply will have run out of cash in your wallet.
Running out of cash will then signal to you that you have overspent and that it's time to tap on the brakes.
5. Save where possible
Cutting back on your current expenses may save you a ton of money in the long run.
This is actually one of the best tips, and it works. Although the downside is that it doesn’t save you a lot of money in one go, it will save you money in the long term.
So rather than thinking that you can save a lot of money every month at once, think of this as saving for the long term.
Practical ways to save on expenses
E.g. electricity costs money, so when you are not using appliances, rather switch them off, then leave them in “standby” mode. The same goes for lights, if you are not in a room where you need light, keep it switched off. Think of how much you can save on your grocery bills, by planting your own little vegetable garden. And you can even use a water tank to collect rainwater for your garden instead of using municipal water.
Cutting back on your current expenses may save you a ton of money in the long run.
6. Keep your small change
Saving small sums of change will add up over time and will make a huge difference.
This is usually something that you see in advertisements on the TV, where someone saves change in a bottle because they have a dream or something they want to buy that is very expensive.
For some people, this might even sound a little stupid, but the truth is that every small bit of change will make a difference.
Save over a set period of time
It might even be a good idea to give yourself a set time frame such as a week, month or even a year of saving all of your change and just see what a difference it makes.
7. Keep a record of your daily spending
With so many mobile apps available, keeping track of your daily spending has never been easier.
If you're old school all you need to do is to keep all of your receipts and print out your bank statements on a monthly basis. Most of us throw them away, but if you really want to save them, trust me – keep them. This way you know how much money you spend in a day and it might help you not to overspend.
Use mobile apps to track spending
For everyone else, make use of the many free mobile apps that allow you to quickly and easily keep track of your spending and even categorize them.
8. Walk more, drive less
This is about more than just saving on fuel costs, it's about making time to clear your mind and get with the flow.
In today’s world, walking might seem like a difficult thing to do. We all have busy lives and let’s be honest we would all rather drive than walk.
But if you live somewhere where you are basically within walking distance of shops, you might just save some money, if you think in terms of petrol consumption and maintenance costs on your car.
Improve productivity by taking time out
And if you seldom get the chance to exercise, this tip is for you. Not only will you save but it will help get you fit and healthy and improve productivity.
9. Make small changes to your spending
You don’t have to stop enjoying what you love, but you can try and find more affordable ways to do them.
A good example would be the fact that you might eat at work every day (at a price of course), but why don’t you rather choose to make sandwiches at home that you can take to work for lunch? At the end of the week, you would have surely saved some money.
Make your money go further
This tip can easily be implemented in all areas of your life from food and drinks to electricity, transport and clothing. Find ways to make your money go further in your everyday life.
10. Recycle and reuse
Recycling is something that we should all be doing given the current climate issues we're facing but, it can also help you make and save cash.
Not only is it good for the environment, but it can also help you save.
Reusing to help you save
When you keep empty jars, you can use them for storage containers or you can even start preserving fruit and vegetables. Keeping newspapers might also come in handy – you can use them to wrap stuff and even clean your windows.
11. Save on petrol costs
This is also known as carpooling or making use of a lift club and can help you save.
This can work for people working at the same place or children attending the same school.
Saving money by carpooling
By using one vehicle you can save on fuel as well as travel costs and it will make a clear difference to your pocket in the long run.
In addition to helping you save money, you will also be doing the environment a huge favour while networking.
12. Earn cash on the side
Most people who have started successful businesses started it as a side hustle to earn extra cash.
Every one of us has a hobby. Perhaps you are creative and talented or you simply just enjoy your hobby, it could make you some extra money. There are endless options e.g. baking, house sitting, babysitting and even something like knitting.
Earn money online
For those who are social media and tech-savvy, you could start offering services online and earn cash during your spare time.
13. Master household spending
When it comes to groceries and household maintenance, knowing how to spend is your greatest asset.
Use shopping lists
It is always a good idea to go shopping with a list of the things you NEED. If you don't, chances are good that you will end up spending a lot more than you should on yours. This is one of the most basic yet powerful household spending tools.
Buy in bulk and save
Many people prefer to buy in bulk. It might be a little costly for the first time, but it will definitely make a positive difference in the long run.
Find specials to save cash
You will always find specials in the newspaper. It might be a good idea to keep your eye on specials, whether you do your shopping weekly or monthly. By buying specials or reduced items, you can actually save a lot.
Never go shopping on an empty stomach
We all know this saying and it can’t be closer to the truth. There is a 100% chance that you are going to end up buying things that you don’t necessarily need.
Make a weekly/monthly meal plan
Most of us eat the same meals on a regular basis. So all you need to do is see what you have at home and what things you need in order to make your meals. Draw up a meal plan and try your best to stick to the plan when going shopping.
14. Save on monthly bills
Have a look at all your bills and see if you can manage to cut down on some of them.
A cell phone bill is a very good example. By putting a call limit in place, you can be sure to never exceed your target amount at the end of the month, meaning you will save some money.
Save on Insurance
If you're making use of the services of an insurance or security company, you can always look for cheaper options, but where you still get the kind of service that you need and want. In the end, you have a win-win situation.
The tips given above are really quite easy to follow and maintain. The important thing to remember is that wanting to save money is something that you need to be willing to do for yourself.
Budgeting and saving depend on the environment you live in as well as your type of lifestyle.
Saving is all about making small changes
To budget and save does not mean you must start taking drastic measures or stop doing what you enjoy, you simply have to start making small changes to your everyday life and spending habits.
In the end it will not only give you a better life, but it will also improve your financial situation in the long run.