If you’re like most people, you find it difficult to stay under budget. Despite your best intentions, you still end up spending more than you planned. While going over budget may not seem like a big deal at first, doing it consistently affects your ability to save. Not only that, but it impacts the length of time it takes to reach your financial goals, too!
When it comes to building a strong financial foundation and creating wealth, your budget is key. It outlines how you’re planning to spend your income so that you’re also able to save. By staying under budget and saving, you’ll have money to build an emergency fund, pay down debt, and start investing. At this point, it’s only a matter of time before you’re financially free and living the life of your dreams!
Here are 8 simple ways that you can stay under budget and save big money!
#1: Create a Budget
Surprisingly, a significant number of Americans don’t have a budget. Because of this, they don’t fully recognize the amount of money they bring in and thus have available to spend. As a result, they end up living beyond their means and going into debt while struggling to make ends meet!
Before you can come in under budget, you first need to establish a plan for your money. In doing so, you begin to realize the limitations of your income as well as all the places where you’re planning for it to get spent!
As your budget begins to take shape, you’ll recognize that some categories are more important to you than others. Rather than cutting the ones that matter, reduce or eliminate the ones that feel excessive or wasteful. This way, you can come in under budget and save more money without feeling deprived!
For one reason or another, budgeting has a bad rap. Too often, it’s viewed as limiting and restrictive, when in reality it helps you get more of the things you want. Not only does this increase your quality of life, but it makes saving and achieving your goals easier, too!
#2: Track Your Spending
Despite having a budget, some people are still unable to save. Most often, they don’t look at their spending, so they have no way of knowing their total expenditures. Without this financial awareness, they’ll spend more than they planned which pushes them over budget!
However, tracking your spending allows you to see where your money is getting spent. Not only can it help you determine the places where you’re wasting money, but it allows you to disperse it more evenly, too. This way, you don’t have to skimp or be extra frugal with money towards the end of each month. Instead, you’ll have leftovers and come in under budget!
Sometimes, a simple change in your lifestyle and daily habits can help you stay under budget, too. For example, you may start taking your lunch to work a few times each week to keep from going out. Not only would this curb habitual spending and allow you to save, but you’d appreciate your next meal out more, too!
#3: Only Use Cash
Today, credit is readily available and for some people that can make spending money, they don’t have too easy. Especially when they only need to pull out their credit card, swipe it, and be left with figuring out how they’ll pay the bill weeks down the road!
The easy access to credit fuels most people’s desire for instant gratification, too. Rather than saving for a purchase, their cravings take hold and cause them to spend emotionally. Not only does this make controlling their impulses more difficult, but it makes it much harder for them to stay under budget, too!
Also, credit cards make it difficult for you to be financially responsible. Rather than using them to earn rewards and free money, they tempt you to overspend. Having said that, one study found that consumers spend up to 83% more when they pay with a card, instead of in cash!
One easy way to curb your spending is to switch to a cash budget. Rather than having unlimited access to credit, you’re given a fixed amount. This way, when your allotment runs out, there won’t be a place for you to turn and receive more!
In addition to that, switching to a cash budget makes you a more conscious consumer. Research shows that when you pay with cash, you pay closer attention to each purchase you make, too!
#4: Fully Understand Large Purchases
For many people, it’s not the small everyday purchases that derail their budget. It’s the large ones that are often financed, like a home, vehicle, or boat.
Housing and transportation are the most common types of expenses that people splurge on, too. At times, they’ll spend over 50% of their income on these two items alone. That’s before any maintenance, repairs, or other hidden costs get factored in, either!
To be under budget in any spending category, let alone these two, it pays to understand the total cost before you buy. By accounting for the monthly payment and other recurring costs, you can see how the expense fits into your spending plan upfront. Therefore, you may realize that you can’t afford the item or need to make changes to your budget so that you can!
When it comes to buying a big ticket item, it’s best to take your time. By moving slow, you have the opportunity to do research, compare options, and determine which one fits into your budget and meets your needs!
Also, it helps to factor in reserve funds when you make a large purchase. Given that most goods are going to break down and wear out over time means that you’ll incur additional costs. Rather than feeling pressure to come up with a large sum of money all at once, reserve funds allow you to save for them over time!
#5: Use a Buffer
In a perfect world, you wouldn’t encounter any surprise expenses that keep you from being under budget. You’d be able to spend money and save it without effort. But in reality, you’ll encounter surprises from time to time!
While an emergency can derail your budget, not all surprise expenses are emergencies. For example, you may accept more social invitations from one month to the next just as you may splurge on different material goods.
No matter what prevents you from being under budget, having a buffer can help. With it, you’ll have additional padding so that you can spend a little extra while still being able to save!
One way to add a buffer to your budget is by creating a new budget category, such as miscellaneous expenses. Since your extra spending will likely change from one month to month, it can act as a catch-all. This way, if you forgot to budget for an irregular expense or wanted to donate more to charity, you could and you’d still end up on budget!
#6: Calculate The Time Cost
When it comes to spending, most people only consider the monetary cost. However, there’s also a time element. After all, you’re likely spending time so that you can earn money!
Truth be told, time is your most precious resource. While money will come and go, time is only ever spent!
When you start viewing purchases through the lens of time, you begin to understand their true cost. It’s no longer just $50 here and $100 there, it’s your time and life that’s being spent!
For example, imagine you discover a new restaurant and want to check it out. Before going, you brown the menu and estimate you’ll spend $100. If you earn $25 an hour, then this one meal costs you 4 hours of your life. Not to mention, you’ll devour it in minutes and be hungry again in no time!
Many people are shocked when they first start calculating the value of their time, too. You may discover that both your time and money are going out the window a whole lot faster than they’re coming in!
#7: Budget for Fun
Too often, when people want to save more money, they cut the costs that make them happy first. As time goes on, their feelings of deprivation grow. Soon thereafter, they snap and go out on a spending spree, unraveling all their hard work!
While not everyone considers budgeting fun, everyone should budget fun money! Including it ensures that you have resources dedicated to the expenses that matter and bring you joy. Although it may seem backward, spending fun money makes staying under budget and saving easier, too!
For example, most people are going to spend decades in the accumulation phase. While building independent wealth, you’re going to face obstacles and at times feel down. But when you include fun money, you’ll have the means for a psychological boost that allows you to endure!
#8: Increase Your Income
As a tightwad, my first instinct is to help you reduce your monthly expenses. By trimming and sticking to a reduced budget, you build financial discipline which puts you in control of your money and not vice versa!
After your burn rate falls, then you can start focusing on earning more money. This way, you’ll be in the habit of staying under budget and saving. Besides that, you’re less likely to fall victim to extreme lifestyle creep, too!
A few ways to increase your income are:
- Negotiate a raise
- Find a higher paying employer or career
- Start a side hustle
- Buy cash flowing assets to make mailbox money
More often than not, society makes you believe that you have to earn a big income to save money. While it helps, it’s not required. After all, countless high-income earners live paycheck to paycheck and are unable to save!
Regardless of income, if you want to build wealth, you have to stay under budget so that you can save. Once you’re saving, you’ll have the opportunity to begin creating the life of your dreams!
What’s your best tip for staying under budget? Comment below.
Great ideas here. I stopped tracking my spending years ago. This is a great reminder to get back to the basics.
It doesn’t have to be complicated. The basics work!