10 simple tips for successfully managing your budget
Is sound money management something you struggle with? Maybe you’re worried about saving enough for retirement, or you don’t have a rainy day fund you can use in case of an emergency.
Whatever your concerns are, there’s no time like the present to take charge of your finances and get into good budgeting habits.
Here are 10 simple tips to help you successfully manage your money.
1 – Make a budget
Many people don’t budget because they don’t want to go through the tedious process of listing expenses, calculating the numbers and making sure everything adds up.
But if spending a few hours budgeting each month is all it takes to get your personal finances back on track, why wouldn’t you? Instead of dreading it, focus on the benefits it can have on your life.
2 – Use your budget
Making a budget won’t do you any good if stays on a shelf gathering dust.
Check it throughout the month to guide your spending decisions. Update it as you make financial transactions. At any given time during the month, you should know how much you can afford to spend given the expenses you still have to pay.
3 – Set a limit for nonessential expenses
A crucial part of your budget is the surplus, or the amount left over after subtracting your expenses from your income. If you have a surplus, you can use some of it for fun and entertainment, but don’t spend it all!
It’s not a good idea to use this money to splurge, particularly if it’s not a large amount and you don’t know what surprises the rest of the month may bring. If you save your budget surplus from month to month, you will truly improve your financial situation.
4 – Keep a lid on small expenses
Small purchases here and there add up quickly, and before you know it, you’re over budget.
Start tracking your invisible expenses to find out where you’re overspending. Save your receipts and record your purchases in an expense journal, sorting them into categories so you know where you’re having trouble controlling your spending.
5 – Limit monthly payments
Just because your financial situation is improving and your credit rating is starting to rise doesn’t mean that you should be less careful about how you spend your money. Monthly expenses should be taken very seriously, as they often represent a significant financial commitment that can prove to be a burden.
For example, rather than signing a cell phone contract that includes a new device and a monthly data plan, consider keeping your old phone or purchasing one second-hand at a reasonable price to significantly reduce your monthly payments.
6 – Take the time to compare prices
Make the most of your money by comparing prices and making sure you are paying the lowest prices for the products and services you need.
Look for discounts, coupons and cheaper alternatives wherever you can. Also, if you are looking for a mortgage, car loan, or personal loan to finance a project, take the time to compare interest rates.
7 – Save up for big purchases
By saving rather than using credit, you avoid paying interest on the purchase.
Furthermore, when you put off major purchases that aren’t essential (a new TV, for example), you give yourself time to compare prices and evaluate whether or not the purchase is a good idea.
Of course, for essential purchases in emergency situations, you should still consider solutions like quick online loans that allow you to make your purchase immediately without affecting your credit.
8 – Limit credit card purchases
Credit cards are an impulsive spender’s worst enemy. When you are strapped for cash, resist the urge to pull out your credit card without asking yourself whether you’ll have the means to pay the bill at the end of the month. If you don’t pay the balance in full, you could end up with big interest charges.
Also, think twice before getting additional credit cards. They’ll just make managing your budget even more complicated and increase the number of creditors and financial institutions you owe money to.
9 – Make the most of your benefits
You shouldn’t turn your nose up at any cost-saving opportunities available to you. Every chance to save is worth taking, your employee benefits included!
Why pay out of pocket for your glasses or contact lenses if some of the cost is covered by your group insurance plan? Maybe your employer offers discounts for gym memberships. Take advantage of all the benefits offered by your employer and you could save a lot of money.
10 – Put money in a saving account regularly
Putting money into a savings account every month can help you develop healthy financial habits.
You can even have the money transferred automatically from your chequing account to your savings account. That way, you won’t have to remember to make the transfer or feel like you’re taking money out of your own hands, and you’ll quickly get used to the new level of income.
The money you save can eventually be put towards purchasing property or retirement.
Follow these budgeting steps towards financial freedom
Remember that sound budget management isn’t limiting you—it’s actually a step towards more freedom. As many personal finance experts have said, “Either you manage your money, or the lack of money manages you.” The best way to achieve financial security is to set a budget and stick to it!
Life can sometimes throw you off course, but not to worry. When that happens, the specialists at DMO Credit can help you get back on track. As long as you return to budgeting, a setback here and there won’t destroy your future financial success.