- Budgeting Tips That Teach You How to Save Money
Budgeting Tips That Teach You How to Save Money
Money is one of those things in this world that we simply can’t get enough of.
No matter how hard we try to save, the end of each month seems to always come with a sigh of relief that the month’s depleting financial budget can finally replenish — and you can enjoy the farmer’s market or a large bucket of popcorn at the movies.
But that mindset can also be a huge part of the problem.
Oftentimes, we run through much of our financial budget in the first few weeks of the month and are left staring down the dark end of an empty wallet with unusable credit cards.
Luckily, for everyone involved (you, your friends and your significant other), this list of budgeting tips will teach you how to properly save money so that you can get many things you want and still have money left over.
How to Save Money 101
To begin your monthly journey to saving money, you must first know the worth of a dollar. It sounds so simple, but this small task can have a large impact — and it’s the most overlooked facet of budgeting. I know, it sounds a little off, right?
If you work hard for your money, chances are great that you know the value of a dollar. But that’s not always top of mind.
Why do you think stores are so successful at capturing a sale from you with that last-second impulse purchase in the checkout line?
You’re not thinking about how that $1.50 for a soda, candy bar or pack a gum fits into your monthly budget.
Take a cheaper necessity in life or something you work hard to pay for and enjoy, such as a bag of salad for $6 or a cheap taco Tuesday out with friends for $12. Each has a special place in your budget.
The lettuce is somewhat of a necessity that can help to feed you for three meals and the taco Tuesday does wonders for the entertainment aspect of your life.
If you keep one of the two in mind at all times, you’ll trick your brain into evaluating what’s more important to you.
Is that candy bar worth cutting into your salad or fun budget? We didn’t think so. If you buy it, you then have less money available for your grocery or fun budget.
When we trick our minds into deducting an unbudgeted item for a budgeted one, we can more easily associate that purchase with our overall budget and then skip out on that purchase.
How to Make a Budget
Setting up a budget is much simpler than you may think. All you need to do is create a spreadsheet using Google Sheets or Microsoft Excel. Then you jot down the categorical spending you typically have each month.
I have 25 categories in my personal budget, which does seem like a lot before you realize 12 of those categories don’t really fluctuate too much month after month (six don’t fluctuate at all — car payment, home and auto insurance, student loans, etc.)
It’s OK to combine some categories, too. For instance, I recently started combining eating out at restaurants, entertainment like concerts and a night out with friends, and other things that bring a similar kind of joy into my life.
I find this easier because I’d reach the (very low) max budget for excursions around town and still have a significant amount left over for restaurants.
Then I’d go over budget if my friends asked me to do something with them the next weekend. I’d then do the excursions and be over budget, while sometimes going over budget on two more categories that were combined.
Doing it this way, it’s easier to keep track of all the categories and not write it off when you go way over budget on two that were combined.
Make sure your spreadsheet automatically updates with the amount you have remaining for the month after each expense is input. Make sure it also has a yearly spend budget and it updates if you go over budget one month.
This is the more painstakingly difficult part: you must include each and every transaction for the month in your spreadsheet. If you don’t include one or two items, you’re more likely to write it off and go over budget. So this one is the most crucial in terms of budgeting tips.
Money Saving Tips
One of the easiest and best ways to save money is to stick to your monthly budget. If you do that, you’ll find that you save more money than expected each month because you’re conscious about your spending and, therefore, spending less money than you initially budgeted.
It is also proven that people tend to spend less money when they pay with cash as opposed to a credit card.
But, spending this way can be extremely tough to track and then you won’t be racking up all those points on your credit card — which can be redeemed for actual money, gift cards or something else you’ve been saving for but just can seem to ever save enough.
Another money saving tip is to drop each month’s budget by the same sum of money, if you can. Let’s say you’re like me and have 13 categories with wiggle room each month.
Now cut down $5 from each category. That $5 from each category just saved you $65 per month and $780 for the year. That’s a significant amount!
When you realize you’re comfortable spending $5 less each month on things like entertainment or groceries, you can drop it another $5, which will seem just as easy after waiting a few months.
How to Stick to a Budget
While there’s no single way of correctly setting up a budget and sticking to it month after month, training your mind to associate every item or experience you trade money for is a great way to start!
The next way is psychological in nature and typically takes a few months to truly train your brain.
At the end of each week or month, rate each purchase on a scale from zero to five in terms of how much you regret the purchase (five being the utmost regret and zero reflecting not a drop of doubt).
You can either try to cut those purchases out of next month’s budget or take the value of those items completely off of next month’s budget. If you regret that $30 you spent going out to eat on a Wednesday instead of cooking in, subtract $30 from next month’s budget!
How to save money by making a budget and sticking to it is easier said than done. If you create a monthly budget, it may take a few months before you can successfully cut certain things out of your budget.
That’s why the saying quitting cold turkey holds so much value!