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6 Ways to Prevent Your Budget from Failing

6 Ways to Prevent Your Budget from Failing

The word “budget” has such a negative connotation in today’s society.  Individuals associate the act of budgeting with some sort of militant regimen that hinders them from having any sort of flexibility with their money.

The end result?  Failure.

Fortunately, there are a number of ways to prevent your budget from failing and make it work for you, minus the ball and chain.

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Before you create your budget, track spending for at least one month to get a better idea of where your money actually goes.  Once you’ve taken this pertinent step, consider the following tips to help you stay on track throughout the month.

1) Be as specific as possible.

Fluffy budgets are destined for failure because they do not consider all the key factors.  Big expenses are important, but it is the little things that will usually send you flying off the deep-end.  If your budget demonstrates that you can cover all your fixed expenses with a little change to spare, you may feel somewhat satisfied until you realize midway through the month that things are going down-hill because you forgot to incorporate the daily visit to the nearest fast-food joint for lunch.  Bottom line: every cent counts, so be sure to include those variable expenses down to the penny.

To help you track variable spending, it may be a good idea to incorporate the envelope system.  That way, your budget won’t stand a chance at failing.

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2) Set realistic expectations.

It never hurts to dream big, but actually making them a reality is another story.  The same rule applies to budgeting: unrealistic figures will set you up for failure each and every month.

If you know that you spend a certain amount of money each week on groceries, do not attempt to cut the number in half just for the sake of making the budget balance.  Instead, make small cuts over time to build the momentum and prevent you from getting discouraged.

3) Believe in yourself.

This may sound a bit strange, but successful budgeting has a lot to do with your attitude.  If you are pessimistic about the process and your inability to successfully commit to the plan from inception, you will probably fail miserably.  On the other hand, if you learn to view your budget as a spending plan that will help you accomplish your current and future financial goals, you will more than likely be inclined to remain on track because there is a light at the end of the tunnel.

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4) Solicit the assistance of an accountability partner.

Do not go out and ask your best buddy who agrees with everything you say and do for help.  This is actually counter-productive.  Instead, find someone to check-in with on a consistent basis who will be honest with you and hold you accountable for your spending habits each month.

Some even go the extra mile to hire a financial coach that is seasoned in budgeting and can provide extensive assistance with budgeting.

5) Prepare for the unexpected.

Wouldn’t it be great to live in a world where emergencies did not exist?  Wishful thinking.  Unexpected occurrences are inevitable, so it is important to incorporate a little padding in your budget each month to cover those moments that completely catch you off guard.  Also, stash away a little cash each month to build up that emergency fund.

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6) Cut yourself a little slack.

Let’s face it: sticking to a budget is hard work.  That is why positive reinforcement is so important.  Develop some sort of reward system for yourself that will motivate you to keep your eyes on the prize each month.

Following these tips on a consistent basis will help put your mind at ease when developing and executing your monthly spending plan.

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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