Creating a budget is a good first step to being financially responsible and building wealth. But your budget does you no good if you don’t stick to it.
Creating a budget is a good first step to being financially responsible and building wealth. But your budget does you no good if you don’t stick to it. If you find yourself constantly overspending, you may need to address your financial behavior. Here are some changes you can make to the way you live and spend that will make it easier for you to stay on budget and improve your financial picture.
Have savings deducted automatically.
Just as you should have your bills paid automatically to avoid missed or late bill payments, you can have money automatically deposited into your savings account so that you truly pay yourself first. That way you don’t have to think about saving money and you’re not tempted to overspend by having the extra money sitting in your checking account.
Give yourself a weekly cash budget.
Studies show that people are likely to spend more when they use a credit or debit card than they would when they use cash. Rather than whipping out your debit card when you see that blouse you want to buy, give yourself a weekly cash allowance. When the money is gone, it’s gone. By resorting to cash not only do you stop yourself from spending more money than you intend to but you may find yourself saying ‘no’ to certain purchases throughout the week so you don’t run out of money in the first place.
Confide in someone.
Whenever you’re trying to make a change in your life, it’s good to have an accountability partner. Tell your spouse, a relative, or a good friend about your intentions to improve your finances and stay on budget. The best case scenario is to choose an accountability partner who is good with money because their good spending habits may rub off on you in the process.
Write down what you spend.
Often we don’t realize how much we’re spending or what we’re spending our money on. We may be surprised to find that our daily coffee habit adds up to nearly $100 a month. When we look at what we’re spending on paper, we become conscious of our spending habits and it might even inspire us to make some changes.
Make your savings hard to reach.
Sometimes you’ve got to use psychology on yourself to get ahead financially. If you’re constantly dipping into your Emergency Fund for non-emergencies, make your savings more difficult to access. Firsts of all, don’t link your checking and savings accounts, so you can’t move money electronically from one account to the other. Other ways to make your savings hard to reach include refusing an ATM card for the account and choosing a bank that requires you to drive a distance to withdraw funds. If it requires effort to access your savings you’ll be more likely to do so only in a true emergency.
When something in your life is not working, it’s time to try something different. By making a few changes to your financial habits, you can build wealth and create more prosperity in the future.