For most people, it can be challenging to limit their spending and place more of their money in savings with each paycheck. Creating a budget and staying within financial guidelines often takes practice and discipline. To ensure that you spend less and save more over time, there are a few important steps to follow.
- Use Cash
Studies show that consumers are prone to spend less when they use cash when purchasing goods or services. Make a habit out of relying on cash when buying gas, groceries, or when dining out. Handing over the money to the merchant is more difficult than paying with a credit or debit card and will allow you to avoid impulse purchases. You can also use an envelope system to separate your cash into different categories in your budget with each paycheck. Once all of the money is used you’ll need to wait until your next paycheck to spend more, which will allow you to spend less money throughout the year.
- Cut Out Luxuries
Saving money often involves plenty of sacrifice and dedication, which will require that you avoid spending money on unnecessary purchases that can be considered luxuries. Limit coffee trips that you, and make a bag your lunch for work each day instead of eating out. You can also cancel your magazine subscriptions, and you should consider pulling the plug on cable. Look for additional places where you’re spending money to increase the amount that you save each month. Although it may be easy to feel deprived if you’re not spending any money on yourself, you can create a small budget for shopping or entertainment to ensure that you continue to reward yourself for working hard and remaining disciplined with your finances.
- Use Budgeting Software
One of the most effective ways to have accountability with your budget is to use software that links to your different accounts. Your money will be managed and tracked with each purchase that you make to ensure that you’re alerted if you’re close to exceeding your budget. The software will also notify you of suspicious charges or activity that occurs, which can often be overlooked when managing your money manually.
- Budget for Larger Purchases
There are often larger purchases that must be made and are not always factored into your budget each month. When you want to save for an upcoming trip or are planning on setting aside money for car repairs, you can set aside a certain amount of money each month in your budget for the items. This will offer extra flexibility in your budget for larger items or services that are not needed on a consistent basis instead of getting into debt to afford the expenses.
- Track Your Expenses
Write down where you spend your money each day, which will allow you to calculate how much you have left for the week. Using personal checks also makes it easy to track your expenses and stay within your budget. Consider keeping an itemized list in your phone or in a notebook of each charge and calculating it at the end of the day. You’ll also want to check your bank account on a daily basis to monitor where the money was spent and ensure that you’re making progress with your financial goals.
For most people, it takes a significant amount of self-discipline to spend less and put more money into a savings account. Although it may not always be exciting to follow guidelines with your spending habits, the sacrifice will prove to be effective and rewarding with the financial security that is gradually obtained.