Stay on Budget with These 3 Steps!

My husband and me, seen here during a family photo shoot a few years back, have found that one of the keys to a strong marriage is our mutual commitment to stay on budget!

Ever wonder how some people seem to be able to stay on budget and make money multiply, while others can’t seem to save a dime? No matter your income or economic status, money is an important tool and resource. Just like any other tool or resource, it has to be used and managed properly for it to serve its purpose. 

If you have a goal to buy your first home, take a vacation, or learn to live within your means and get out of debt, your first step must be to live on a budget. I know, it’s hard! But here are my three steps to stay on budget and meet your personal finance goals.  

1. Track

Tracking your spending is the biggest piece of the budget puzzle. You have to know where your money is going, or you don’t have a budget. If you aren’t doing it already, track every single penny you spend for a month. 

The point of this exercise is to identify areas for improvement in your spending habits. Everyone has an area that seems to make their money evaporate more quickly than others. I have a friend that once had to ban herself from shopping at Target for a long while, because it became very clear to her after tracking her spending that she did not have the willpower to walk through the store and not overspend.

Once you have tracked for a full month, you should have a better idea of where your money is going. To stay on budget, you should continue to track and categorize your spending. However, instead of doing it to identify money drains, you will be doing it to be sure the right categories are being funded and maintained according to your goals.

2. Automate

The second step to stay on budget is to automate as much as you can. Put recurring bills on auto-pay. That way you don’t have to take the time to think about whether or not you forgot to pay something.

In addition to setting up bills on auto-pay, automate your savings, too. The classic advice to “pay yourself first” is a lot easier to follow if you set it up to happen automatically. If you are paid via direct deposit, most employers allow you to split your paycheck deposit between two accounts, so have some money going straight to savings. If you don’t have direct deposit, you should still be able to set up automatic transfers with your bank.

3. Optimize

The whole point of tracking and automating is to optimize your money. Basically, that’s just a fancy way of saying make it work for YOU! How do you do that?

Well, there are the obvious (and smart!) answers, like funding investment accounts. If you are lucky enough to have a retirement savings program at work with an employer match, that should be a no-brainer for you. Don’t leave free money on the table!

Real estate investing is, of course, another way to optimize your money. In the long run, real estate is a great way to build wealth, even if you never have any interest in being a landlord and just purchase your own home and position is to maximize appreciation. 

But to invest in mutual funds, stocks, real estate—even just buy your own home—all of that takes money up front and on a regular basis, right? So it all goes back to budgeting…

There are some great tools out there that help you stay on budget. I am not going to cover them all here, except to say to pick a tool/system and work it! This article has a great round up of current online programs and apps. When it comes to the logistics of managing money, what works for one person may not work for someone else. 

But what always works? Track. Automate. Optimize. Don’t work for money--make your money work for you!

Are you thinking about how to put your money to work by jumping into real estate by buying your first home or investment property? Download my Buyer’s Guide below, and contact me today to discuss how I can help you reach your goals!

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