Making Your Budget Work Harder for You
In Part 1 of our series on budgeting for the budget-phobic, we walked you through the basics of budget creation. If you’ve followed these guidelines, you should now have a working idea of how much you can afford to spend on all of the key categories of your budget.
Still, your work is far from over. In fact, it’s not unusual to find that a budget that looks good on paper can fall apart in the first few months of implementation. Life events and associated spending can pop up at any time, from landing a new job and needing to purchase a more professional wardrobe to your car starting to make funny sounds, resulting in hundreds of dollars in repairs.
If you’ve already busted your budget, don’t be too hard on yourself. Here in Part 2, we’re going to dive into what it takes to make your budget stick as well as how to figure out where it’s not working and how to fix it.
Creating a budget is the easy part. Sticking to that budget can be much harder. Adhering to a budget requires discipline and practice over time.
If you’ve slipped up, don’t give up. Instead, reset your focus and try again. The journey to financial stability is a marathon, not a sprint. Here are four tips to help you fine-tune your budget process to increase the chances of success.
If you’re constantly exceeding your established budget, you might benefit from revisiting the reasons you created a budget in the first place. It can be much easier to stick to your strategy if you are clear on exactly why you’re budgeting and what it will do for you. Setting clear, concrete goals and buying into them is a great place to start, and the more specific the goals are, the better.
You may not succeed if you set vague or ineffective goals such as:
I want to be an adult about my money.
I need to put more cash away in savings.
I’d like to pay off my student loans.
Try making your goals more specific and actionable while also including the reward you’ll get if you achieve them. For instance:
Building up a $10,000 ‘I Quit Fund’ will allow me to leave the job I hate.
Saving $500 per month for an apartment will get me out of my parents’ basement.
When I’ve saved $5,000, I’m going to hike through Europe.
In Part 1, we emphasized tools you can use to track your spending. But you need to use them! Knowing where you stand in relationship to your goals is a key factor in sticking with your budget.
Don’t just tally the numbers at the end of the month. Check in once a week or so to see how you’re doing. And remember, you can make adjustments to your spending habits for the better as you go along, so don’t get discouraged.
A successful budget is not static. Budgets can and should evolve with your changing financial circumstances and priorities, for better or for worse. If you find that your budget is not working, it's time to identify the problem.
Consider whether you are spending too much by reviewing your expenses to find areas where you consistently overspend. You can look for typical problem areas such as the costs of dining out, impulse purchases, or unnecessary subscriptions.
It can also help to evaluate whether your budget goals are realistic in relation to your income. All the discipline in the world won’t help if you don’t make enough to cover regular expenses. If your budget constraints are too tight due to limited income, look for ways to increase your earnings. This might involve a job change, a side gig, or selling items you no longer need.
If you still find budgeting challenging or if you have complex financial goals, consider asking a financial professional for assistance. They can provide guidance on investment decisions, retirement planning, and debt management. This can be especially valuable if your financial situation is complicated. In addition, having another person involved in your budgeting process can help you stay motivated to stick with your strategy.
Creating a budget is not a one-time project you can set and forget. Budgets need to be continually adjusted and re-adjusted as you move toward your financial goals. If you created a budget that didn’t immediately change your life in the way you imagined, don’t be discouraged. Instead, continue to remain engaged with your financial goals by actively evaluating and adjusting based on your needs.
This article is provided for general informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
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