4 Strategies to Build a Better Budget
You have goals, things you want, places you want to go, and an ideal life you want to live. In order to get there you need to start building the blocks, brick by brick.
Building a better budget can help you with that.
1. Figure out your lifestyle expense.
Before you can save and spend more intentionally, you need to understand your lifestyle cost well. How much does it actually cost you to live?
A good way to figure this out is to connect your bank account and/or credit card to an expense tracker like Mint, Goodbudget, or You Need a Budget (YNAB). These apps can help categorize your expenses. After 3, 6, or even 12 months of tracking you’ll have a pretty good idea of your expenses.
Working with a financial planner can help you use your current expenses and create savings and spending goals that you are comfortable with.
2. Pay yourself first.
Once you’ve come up with your budget, putting a portion of your paycheck into savings, retirement, emergency, or other goals-based accounts before any other spending can make a huge difference.
As long as your budget is reasonable, after a few months of paying yourself first you likely won’t even notice this sum is out of your accounts.
By paying yourself first you’re prioritizing your long-term financial success, over short-term gratification.
3. Automate your transfers.
You’ve figured out what to do, now what? Don’t rely on human behavior to get you to the finish line. Rather than trusting yourself to make the transfers to your goal accounts, set up automatic transfers for a day or two after you receive your paycheck.
4. Track your budget.
The first edition of your budget is not the be-all and end-all, by any means. How is it working? Do you feel strapped for cash, or are you noticing you have additional funds at the end of the month? Revisiting the budget every so often can assure you are optimizing your income.
When building a better budget, a financial planner can help you get organized and set savings goals you can stick to.
