Managing money can be a chore for many people. While some individuals have no problem staying on budget every month, others struggle to make it from one paycheck to the next. Why does it seem money management comes so easily to some people? The answer is likely that they are more aware of where their money is going. Included here are a few tips to help you stay on budget.
Make a Spreadsheet
With the birth of simple online spreadsheets, you can create an Excel document to help you manage all of your finances. This simple document can be shared between the smartphone devices in your home so everyone is aware of the money situation for the month, week and day. Creating a spreadsheet is simple, but knowing what to budget for can be another matter.
To define your budget needs, spend one month tracking where your money goes; you will need to track all income and all expenses on your spreadsheet. Define where your budget needs are: do you need more money for eating out or more money for gas? By first identifying where your budget requirements are you can learn to work around them.
Make Small Cutbacks
Many people mistakenly believe that a budget should be created so they cut their spending in all areas, however this mentality usually sets you up for failure. Clearly all of your money is being spent each month, and you want to manage it better, but that does not mean you need to cut out all of your favorite expenses.
If you decide to spend only $100 a month on groceries with no idea how much you currently need, you may find yourself short of cash after the first week of the month. However, if you know you regularly spend $200 on eating out each month, try cutting it back to $175 and saving the extra $25. Small changes like this can create a plush savings account in no time.
Use the Envelope System
Handing over cold hard cash can create a different mentality than swiping a card. For many people, the most effective way to keep to their balance is to withdraw a set amount of cash for the month. This means one envelope with money for groceries, another for gas, another for eating out and so on. You will spend less because you are conscious of handing over your money, and you will be limited by empty envelopes towards the end of the month.
Track Expenses on a Daily Basis
One way that many people get off budget is just by failing to track their daily expenses. They are breezily spending along throughout the month and fail to keep track of where they are within their budget constraints. Taking the time, each day, to evaluate what was spent can help you develop healthier spending habits throughout the month.