How to Stick to a Budget

I didn’t start doing tracking my spending until I was in college. At the time I was getting most of my money from the Post-9/11 GI Bill through my father, which gave me a book stipend and monthly living allowance. The monthly allowance was more than the cost of my rent, so I had extra funds available for my regular expenses: food and fun. I did not have any sort of budget that I used to keep track of my finances. Instead I would check my bank account every couple of days to make sure that I always had at least $500 available. Beyond making sure that I never went below that number I didn’t track my spending.

This is one of the biggest financial regrets that I have in my life. If I had been smart and tracked my spending instead of the free for all that was my financial situation, I could have easily found ways to cut my expenses. In doing so I would have been able to save some money to prepare me for my post-graduate life. After 2 years of university I could have easily saved anywhere between $1000 and $2000 when you count the extra money I made as a Student Assistant. That money would have been a huge help in the subsequent move and wedding that I experienced after getting my diploma.

Making a financial plan is a lot harder than it sounds. Only 41% of Americans track their spending on a budget. Writing a budget isn’t even the hardest part, since you then need to keep track of your daily expenses to make sure that you don’t spend more than you planned on a given day, week or month. If you lose track of your spending on a regular basis it can quickly snowball into a huge drain for your wallet. I’ve been on a monthly budget for several years now, and it still takes a lot of work to stick to the strict financial plan that covers my expenses while giving me room to save and invest. Read below for my tips on how to stick to your budget and avoid overspending!

Have a Written Budget

The critical first step in sticking to your budget is having your plan written down. You need something you can reference on a regular basis to make sure that you’re not spending too much money. You can use many different mediums to write your budget. If you like to keep everything on your computer I recommend using a tool like Microsoft Excel. In fact, if you join the Budget Challenge you’ll be emailed a free copy of the excel spreadsheet that I use to track my own finances. If you’re old fashioned and prefer paper then you can use a notebook, all that’s important is that it be written somewhere.

Keep Your Receipts

My wife and I have a simple system. We always keep the receipts for all of our purchases, and when we get home from we put them in a dish on the counter. When the time comes to update the budget with our recent spending I take all of the receipts and enter them into my budget spreadsheet. This is how we track our spending each week. It’s great for record keeping and is just a good habit to get into. Receipts are important to keep for potential returns and can even be helpful with your taxes. If you’re smart you’ll keep the receipts for at least all of your major purchases.

Carry a Small Notepad

If having dozens of receipts lying around isn’t for you, then you can carry a small notepad in your pocket or purse that you use to track your spending throughout the day. I have learned from experience that it’s usually not big expenses that break the budget, but small expenses that add up significantly over time. I’m talking about things like fast food and snacks. For example, let’s say you come into work in the morning and buy a $3 cup of coffee from the lunch area. That afternoon you spend an additional $5 for lunch, and near the end of the day you drop $1.50 at the vending machine for a bottle of soda. That’s $9.50 that you’ve spent in total that day. Do that every day and you’ve spent an extra $47.50 for the week, which done consistently can lead to you spending anywhere up to $237.50 that month. That’s how a budget gets blown out of the water, and the best way you can avoid this is to write down what you spend when you spend it. That way you have the visual to remind you of what you’re doing so that you don’t mindlessly spend your way into the red.

Use a Budget App

There are a ton of budget apps out there that you can use on a Droid or iPhone and can either track your spending automatically or let you enter your expenses manually. I’ll be honest up front and admit that I don’t use any of these apps. I prefer to use my receipt and excel spreadsheet system, but I know many people who live off of their phones and find it easier to use them to track their finances. I recently read a great article that covers several of these different apps that you can use. I highly recommend that you read it if you’re interested in tracking your spending this way.

Update Your Budget Regularly

This is a very important tip to follow if you want to stick to your budget. An earlier tip covers how to keep track of what you are spending. The next step you need to take is measure what you’ve spent against what you budgeted on a regular basis to make sure that you’re sticking to the plan. I update my budget with our spending for the week every Sunday, and you really shouldn’t be working with an interval any longer than that. The longer you wait to update your budget, the more likely you are to lose track and accidentally spend more than you meant to. Hold yourself accountable by keeping your budget up to date with what you’re spending!

I hope you found this helpful! If you have any tips and tricks that you use to stick to your budget that I didn’t mention above, please tell us about it in the comments!

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