By Jillian Taylor-Mancusi
Budgeting can be a nerve-wracking process, but in the end, it’s one of the best things you can do for yourself and your pocketbook. It puts you in control of your money and helps you know exactly where your cash is going. Budgets that include goals based on both spending and savings plans can help you make sure your money is being spent wisely.
How to Control Spending
Budgeting means managing your savings as well as what you are spending. However, the grind of saving every penny can be frustrating. Sometimes, it leads to overspending. The following tips will help you learn how to budget in a way that allows you to spend and save in a smart way:
- Do your own thing. It’s easy to be influenced by the way your friends and family spend their money. However, trying to keep up with the Jones’s only drives you further into debt.
- Don’t live outside of your means. Living paycheck to paycheck is stressful. Make sure the purchases you make are ones you can actually afford.
- Use cash. If you’re like most people, you use your debit card everywhere. However, it’s harder reign in your spending when you swipe a card for every purchase. Use cash instead.
- Don’t shop without a plan. Impulse spending can sink the best of budgets. By planning your purchases, you can avoid debt and save for the things you want to buy.
Setting Savings Goals
Savings goals help you direct the money you are setting aside towards the things that matter the most to you. Your goals also give you something to look forward to. Exercising self-discipline to plan for and save for your future is hard, but the rewards are worth every sacrifice you make. Your savings plan should include:
- Emergency savings. Unexpected car or home repairs, illness, or a job loss are never welcome and always seem to come at the worst time. By setting aside funds for emergencies, you are prepared with the cash you need. You also avoid taking on more debt.
- Short-term goals. These are goals you’d like to reach in the next 12 months. Paying off a credit card or buying new furniture are a few examples.
- Save for long-term goals. Retirement and education are long-term goals you can begin preparing for now.
- Save for the fun things in life. While it’s smart to plan and budget for rent, utilities, food, and essentials, it’s also important to budget for fun items and activities. When you don’t set aside money for entertainment, vacations, and other things you enjoy, you’re more likely to turn to credit cards to fund them.
Your budget helps you keep track of spending, but it also helps you build up your savings. Setting savings goals that include long and short-term goals, a rainy day fund, and fun should all be part of your financial plan for the future. You will experience less stress and more peace of mind as you work to reach your savings goals while monitoring your spending.