You may be surprised to find out that maintaining a budget often takes as much care as building the budget in the first place. A budget must be maintained over time for it to be a truly successful way of managing a person’s finances. Once you’ve built your budget, check out these tips for maintaining it.
Use Direct Deposit and Auto-Pay Features
Once you’ve crunched the numbers and set up a budget that works for you, it’s a good idea to use the functionality of direct deposit that many companies offer nowadays. One Bankrate article explains why. “If you put that money aside before you even see it, you won’t miss it.” Many companies offer the option to split your deposit in any increment you choose between more than one account so you can easily have 10% of your paycheck go into savings. Not seeing that money will make you less likely to skip a month (or more) on your savings making it easier to stay on budget and keep your nest egg secure in case you need it for something truly important. Likewise, using automated bill paying can help ensure you regularly make any payments that are part of your budget and hold you accountable to paying debts and necessities first.
Pay With Cash
Financial advisors often suggest paying with cash for as many purchases as possible from filling up your car with gas to buying groceries. One tip is to withdraw a certain amount of money each week and spend from this fund rather than using debit cards or credit cards. Often, using plastic leaves people with a sense of disconnect about how much money is actually being spent as compared to physically handing over cash. The tendency to disconnect credit cards with how much is being spent makes it easy to brush off over-spending, which is one of the biggest problems in keeping a budget going long-term. Setting out a budget is all well and good, but if over-spending or careless purchases creep in soon after setting it in place, the budget may soon go out the window.
Write Down Every Transaction
Now that people use debit cards and credit cards more frequently, it has become easier to not log every transaction in your checking out. Likewise, many people have trouble with spontaneous purchases because it seems like only a small amount. However, when one adds up the number of dollars spent on small, on-a-whim purchases throughout a month’s time, the number can be huge. That’s why many financial advisors and budget-based advising websites encourage people to track each time money is spent – whether it’s a dollar donated to kids collecting money for a school project or the new shoes you bought. Pick a method of keeping track that works for you, whether it’s a spread sheet on your computer or a smart phone app and set aside a time you’ll routinely log all your purchases and payments – be it daily or weekly and stick to it. Not only will this keep you from overspending and making as many on-a-whim purchases, but it will let you know if you have wasted money in your budget that could be better put to use elsewhere.
Revisit Your Budget Regularly
Most experts agree that your budget will be most successful and do the most for you if you look it over and revise it every few months. Generally, financial analysts suggest reviewing your budget at the end of each month when the budget is new and tweaking things based on how things work out. Once you’re happy with the way your budget works, you should check it every three months or so to make sure it still lines up with all your current needs. You shouldn’t be afraid to adjust your budget, either. Try to live within the budget rules you set, but know that you’ll need to make adjustments as well, especially over the long term.