The following 7 tips were provided through an anonymous survey. They have been edited for content and grammar.
"Face the world with confidence. Let your loved ones love you more. Plan your money."
This tips hits on a very powerful and important aspect to life changes. Involve your family and friends in the budgeting process. Budgeting is really about changing your habits.
Budgeting Tip #2 - Create Wiggle Room
"When creating a budget, it's important to give yourself some wiggle room to have fun with. If you start to feel that your budget is too imposing, you'll be tempted to break it in a spectacular way. Instead, leave yourself a few dollars here and there to spend on treats."
Some people call this play money or pocket money. An important part of this plan is to try and keep this money as cash. This will keep you from making the mistake of blowing out your budget on discretionary purchases.
Wiggle room also applies to variable costs like utilities. If you budget for electricity costs in January the same way you budget for October, you'll be disappointed. It costs a lot more to heat and cool your home at the height of winter and summer.
Budgeting Tip #3 - Use Budgeting Software
"Mint.com is my favorite budgeting tool. You can put all of your accounts in one place, set goals and alerts. Mint makes it easy to keep up with where every dollar goes."
This website is a product offered by Intuit, the maker of Quickbooks software. So, you should be reasonably assured that your information is safe with them. The site automatically links up with major banks, credit card companies, and brokerages to aggregate your financial data. It will produce lots of nice charts and alerts, but also gives you an automated budget process.
Download their smartphone app to your phone and you will have a financial dashboard to give you a visual representation for your budget. This is very helpful to keep you on track.
Budgeting Tip #4 - Write Things Down
"Writing things down on paper and making a budget is a very helpful practice. Zero based budgeting is the way to go, for example "spend" all your money on paper, and see what you have left you'll be very surprised how much money is given to nonsense in our lives."Putting your zero-based budget on paper is also useful when communicating with your family. You can provide them with updates on progress and a visual aid to show where budget problems occur. Otherwise, you might come across as a cranky person raving about something intangible.
Budgeting Tip #5 - Eliminate Credit Card Spending
"When it comes to credit cards, be honest with yourself: if you don't have the self-control to manage a credit card, it's best just to lock it away somewhere safe and forget about it. Or a better option might be to cut it up, so you remove the temptation to use it altogether!"
You may have seen or heard of someone that freezes their credit card in a block of ice. This way, if they have an emergency, they only need to wait a few hours to be able to pay for it. This might not be ideal for an emergency room visit, but if you keep a minimum of $1,000 in an emergency fund, you should be okay with a debit card, or using an ATM to pull cash out.
Extremely dedicated people will cut up their credit cards to remove any temptation of using them. The facts show that most people do not pay off their cards timely and therefore they are sending profits to the credit card company in the form of interest payments every time they use their cards.
Budgeting Tip #6 - Save Receipts
"Save every receipt for at least 3-6 months in order to eliminate or re-evaluate purchases."
Saving receipts is very important for a lot of reasons. If you buy a defective product, you want to return it. If you have a home office, you may be able to deduct office improvements from your taxes. Sometimes, we may just want to compare the amount charged on our credit or debit cards to the amount on the receipt.
Budgeting Tip #7 - Budget For Unexpected Costs
"I budget for every expense I have all year and then cut it down into monthly chunks. Example my car repairs are usually 1400 a year, so I put 150.00 into my repair fund every month."
Driving an older vehicle is much cheaper than one that is practically new because you will have a smaller car payment. However, the maintenance costs can be a lot higher. A typical transmission replacement could cost $3,000. Windshields could cost $300 to replace. You won't need to repair these items every year, but you shouldn't be completely surprised when they are needed.
Other big expenses could be related to your home. You might need to repaint the exterior or replace your roof. These expenses happen after many years of wear and tear, but they can be budgeted for.
If you have a budgeting tip to share, feel free to leave a comment.
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