Monday, March 14, 2016, AM | Leave Comment
Budgets can be hard to stick to because you have to balance your day-to-day needs, long-term goals, and the unexpected into every month of your finances.
But there are ways to maintain a budget if you’re willing to employ research, some technology, and a little psychology.
Here are few tricks to help you stick to your budget and improve your finances.
Overestimate Your Expenses
When budgeting, we tend to use very specific amounts for things like rent and utilities. This is smart because it tells us how much we need to cover our living expenses, but it also makes us think we’re free to spend anything beyond that amount.
Start adding 10%-15% to your monthly expenses and behave as if that is your true cost. You’ll quickly find yourself with more money left over because your brain will treat that extra money as part of the essentials.
Understand Your Debts & Liabilities
Different debts come with unique risks. For example, falling behind on a credit card can lead to higher interest rates, while falling behind on a car payment could lead to taking the bus.
Whether you’re looking at a bad mortgage or a student loan, know what you can do to reduce or remove that debt, and what the risks are. Depending on your debt levels, it might make sense to consult a credit counseling firm.
For bankruptcy, Wiesner & Frackowiak, LC recommend using it only as a last resort for putting finances back in order.
Manage Your Cash Flow
Take the time to understand exactly when certain bills are due and start managing payments based on that due date, and not on when your paychecks come in.
If you can teach yourself to manage payments, you’ll find you have more money available in the day-to-day. This will make it easier to deal with unexpected costs like a broken water heater.
Automate Everything You Can
Setup auto-payments for utilities and other bills. You might even think about auto-deposits for your savings accounts and retirement accounts.
Automatic transfers are great because they take your willpower out of the equation. The money goes where it needs to, and you can just deal with what’s left.
It’s okay if you can’t get your budget under control right away, or if these tricks don’t completely solve your budget problems.
Think like a magician: keep creating new tricks and refining them until you have the right tricks for you to succeed.
The key thing is to keep trying and to never accept a weak financial situation as a permanent state of affairs.Facebook.com/doable.finance