If you’ve never budgeted before, do not worry. It is not as hard as it sounds! Budgeting is a great way to manage and track your finances. Once you understand how budgeting works, you will reap the associated financial benefits. Read on to learn about the things you should know if you’ve never budgeted before.
The best time to start budgeting is now
Do not wait for the year to be over to start budgeting. Just like losing weight, budgeting is not a new year’s resolution. Start budgeting as soon as possible. You can start small with probably a weekly or monthly budget plan. When you get accustomed to the process, you can now consider budgeting for the short, medium, and long-term goals.
There is no one-budget-fits-all system
Since every person has unique needs and wants, it is hard to find a blanket budget to highlight everyone’s needs. Take time to look at your expenses and your income. You will find that you have been spending a lot of money on some things you do not need. When you minimize or cut these expenses, you will have spared some money. You can allocate the money to other sections of your budget.
You can still have fun while budgeting
One of the most important things to know if you’ve never budgeted before is that just because you are spending less does not mean you will have no fun. It does not mean that you cut off all the good things you used to enjoy. A budget is like a directive. It helps you prioritise and track your expenses so that you do not overspend.
You can incorporate the fun things you love doing inside the budget as well. The 50/30/20 budgeting technique allows you to spend a portion of your income on wants. Fun is part of this. Plan for this activity and allocate a certain amount in the budget.
Ensure you do not overindulge or spend money meant for other purposes. Some people set aside some money as a reward system to be used once they hit the milestone.
You may (and probably will) deviate from your budget at times
No one is perfect. Even when you learn all of the things to know if you’ve never budgeted before, you will still find yourself breaking your own rules from time to time. The temptation to spend some money on a comfort item you have been used to will be high. Sometimes you will give in. When that happens, do not chastise yourself too much. Figure out what happened and how you can avoid a repetition of the same in the future.
Get an accountability partner
Sticking to a budget, especially if you have never done it will be tough for the first few days. According to Chris Pennington, the brain is conditioned to resist change. It will take time to resist the urge to splurge your money on things you think you want but can live without. This is where an accountability partner comes in.
Find someone who will keep you on your toes. Create milestones in your budget and whenever you get there, evaluate whether you were diligent enough to stick to your budget. If you are working as a couple, you should be wary of your spending habits. If you make a small sacrifice, you will be able to save money together.