Sometimes we just need to hit the reset button. And it doesn’t matter what time of the year it is or what point of your life you’re in. If it’s the middle of the month or the middle of the year, if you’re a single college student or you’ve been married for 15 years with four kids, you can always hit the reset button on your budget to get your finances in order.
While there’s no cure-all answer to make everyone happy, rich and consistent budgeters, here are a handful of ways you can reset your budget this year.
Evaluate your finances.
If you don’t know your regular spending habits, you can’t maintain a budget. For those of you who are paper people, keep a folder of all your receipts. If you prefer electronics, review your online bank and credit card accounts every month to evaluate your spending habits.
As you assess where your money goes, separate your expenses into “needs” and “wants.” Groceries are a need. The biggest channel package for satellite TV is a want. If at the end of the month you regularly find that you’re lacking funds, it’s time to start reducing your wants spending, such as not spending $100 eating out each month, as well as any ways you can cut down under the needs column, like maybe renting a cheaper apartment. Get in the monthly habit of reviewing your budget and adjusting accordingly. Doing so will help you create and stick to a workable budget.
Set financial goals.
Another way to reset your budget and drive your desire to maintain one is setting financial goals. Let’s say you’re budgeting for a family. Some good financial goals to set and add into your budget are college savings for your kids, a summer vacation or saving for a bigger house. Let’s use taking your family to Disney World next year as an example, which you need $2,5000 to do. Take that total and then divide it by 12 to figure out what you need to put into savings each month to afford it.
Now is the best time to start planning for your future. And whether they’re short-term or long-term financial goals, you’ll be so excited and grateful that you made and stuck with a budget to meet those goals.
Add rewards into your budget.
Human brains are wired to continue doing something if they like it and receive pleasure from doing it. This is often referred to as a rewarding stimulus, or just a reward.
So if you stay on or under budget at the end of the month, add in that you can go out to eat or buy yourself a new shirt as your reward. You know yourself better than anyone else, so choose whatever reward will work for you and add it into your monthly budget. Just make sure to keep your reward within reason. If you don’t have a lot of extra money leftover, buying yourself a $200 watch probably isn’t a smart or budget-friendly reward.
Take a 21-day financial fast.
Several years ago, Michelle Singletary, a personal finance advisor and syndicated columnist for The Washington Post, invited her readers, in any financial situation, to take a 21-day financial fast. I’m encouraging you to start that same fast today.
In this three-week fast, you can only spend money on the necessities, i.e. food from the grocery store, medicine, personal hygiene products and regular monthly bills, like your mortgage and utilities. What you can’t do is spend money on things you don’t need, meaning no going to the movies, no going out to eat and no going on an online summer shopping spree. You also can’t use your credit cards. If you commit to this financial fast, at the end of it you’ll break bad spending habits, plan a course to get out of debt and stop letting money control you—you’ll be able to reset and stick to a better budget.
If you struggle with budgeting, just remember to keep trying. That’s the key to success here.
This guest post was written by Angela Worley at the Mormon Channel.