October is the perfect time to get organized with your budget. As the weather cools down, and daylight disappears too soon, cozying up with a warm cup of tea or hot chocolate can make budgeting seem not so bad. And, with chilly nights now upon us, it is a sure sign that before long, we'll be facing another busy holiday season and...
this year, I refuse to let money get in my way for the holidays!!!
Last year turned out to be a frenzy of last-minute gifts, and late-night wrapping. I was in every store at the worst possible time, shopping for gifts among hundreds of other last-minute shoppers. Needless to say, it was difficult to navigate the stores. I could barely glimpse the merchandise through crowds of scavenging gift-givers. Cornered in the spatula aisle, I vowed to never allow this to happen again.
So, I am starting with my budget!
Your budget is the guide to all purchases. It's the map to your destination, it's the recipe to your meal. You can't cook a delicious meal without first having a good recipe, and you can't get to your destination if you don't have a clue how to get there. Budgeting is similar. You need a guide to tell your money where to go. Budgets start with three basic things: your needs, your wants, and your net monthly income. Once you determine these things, you can figure out how much you spend each month, and how much you save each month.
Net Monthly Income - Expenses (Needs, Wants) = Your Budget
It's so easy, yet so hard to do
I've figured out the secret as to why budgets, most of the time, don't work. Budgeting for the big stuff is not the problem. We don't forget about rent, or gas, or the electric bill. What we do forget about, are the little things. The lunch on a whim, or the random thing that caught your eye at the store. So, make a budget, but make it with a different mindset.
1. Make a list of your big goals
Knowing your long-term goals can help you cut out the little expenses. Small purchases really add up. Ask yourself: what little things can I give up in order to get to my bigger goals? If you spend $10 a month on coffee, can you save that money instead?
2. Save money for unexpected purchases
If you are someone who likes to buy on a whim, make a savings account for random purchases. You can limit what you spend, by not going over the limit in your account every month.
3. Think about it before you buy it
Don't let impulse buys break your budget. Think about it first. Make a 30-day list. If, at the end of the 30 days, you still want the item, then go ahead!
4. Live below your means
Live below your means, always. Chances are, you don't need the most expensive hair products, or clothes. You can save money on your budget by cutting back on things that you don't absolutely need.
5. Pay yourself first
Budget your savings, too. Don't save what's left after spending, spend what's left after saving. That small change can mean a huge difference in your financial well-being.
What kinds of things break your budget? How do you stick to it? Let me know in the comments!