Ever since I started making a monthly budget almost two years ago, I’ve had trouble sticking to it. I think it’s mainly due to me being single and not having to be accountable to anyone else if I change my budget on the fly. I tend to always budget low, knowing that in a pinch, I can give myself more money. I have finally figured out how to hold myself accountable to my budget. Here’s how I’m doing it:
Make a Realistic Budget
If you have been eating out a lot or going out for drinks with friends several times a month, you should account for what you realistically will spend when you create your budget. You may think you can go without spending on those things if you really try, but budgeting nothing or very little in those categories after a track record of consistent spending at a rate much higher than what you plan to budget is setting yourself up for failure. The key is to be realistic about what you will end up spending and not until you’re on a budget that you don’t go over, should you think about decreasing those areas little by little. My realistic budget is in the range of $150-250 per month higher than my old, make-believe budget that I could never live on. Keep in mind that a budget is a written plan for telling all of your money that month where to go. Not only should you have a plan for your expenses, but also for your left over money at the end of the month.
Schedule an Automatic Transfer of all Leftover Money
After you have made a realistic budget that your happy with, the next step is to set up an automatic transfer of your left over money to its specified location. Whether you want to pay off your debt, save for a big purchase or invest for retirement, you should have the specifics of where and how much already figured out from your budget. In my case, this number is sizable, since I spend far less than I make. Up until this point, if I spent over my budgeted amount in any category, I would adjust my budget on the fly, giving myself more money, pulling it from my left over money. Setting up an automatic transfer of all my leftover spending holds me accountable to stick to my budget.
After all, a real budget allocates all money during the month, not just expenses. While using this strategy of holding myself accountable, if I go over in a category without being able to cut back on another category, I will need to go in my online banking, cancel my transfer and set up another for less money. That causes pain and feelings of frustration and failure. It’s my plan to stay on my budget and stay on track.