Saving money doesn’t have to be stressful. Despite what you may have heard about financial planning, it isn’t always about denying yourself your favorite treats or staying in every weekend. Here are some fast and easy ways to help get your finances back on track without missing out on activities or purchases that are important to your lifestyle.
Find Out Where Your Money Goes
The hardest part about tracking finances is learning where your money is going. Even the best-laid plans can fail if you don’t know how well you’re following them. The first step to better financial tracking is the easiest: track your expenses.
This can be done in a number of ways. Your bank and credit card statements are helpful for finding out where your money goes. You can also find convenient apps that make it easy to record your expenses, such as Wally or Mint.
Make a Plan
Now that you know where your money typically goes, it’s time to dream up the ideal budget. This can be as detailed or general as you’d like because you’ll probably do some refining as you go.
Start with the essential, unchanging monthly expenses before moving on to the fun items or optional extras. Here are some typical essential items, although every budget is unique:
- Rent/housing costs
- Any outstanding debt (i.e. credit cards and loans)
- Groceries and personal items
This is obviously far from complete, but it will help you get the ball rolling. If it helps, you can start with your current typical month and take out any spending that you think wasn’t necessary.
Find a Goal
Why do you want to rein in your spending? Tracking finances can be time-consuming, so few people choose to work hard on their budget without a goal in mind. Visualize your dream vacation, paying off your debt, buying that new car or simply having enough money at the end of the month for groceries.
Whatever positive change you want to see in your budget, keep it in mind as you start to look for areas to cut or trim back. This will give you the focus and encouragement you need as you continue to plan and follow your budget.
Make Room for Savings
Regardless of how much you currently save, you probably want to save more. On average, here is an excellent target for trying to save money and trim back your non-essential spending:
- 50% of your income on essential expenses
- 30% of your income on optional, non-essential and fun items
- 20% of your income in savings
Saving 20% of your income may be difficult for you, but there are a few tricks that can help. Don’t worry if this number seems far beyond reach. Over time, you may be surprised how low you can get your budget.
Of course, some individuals may already be saving 20% or more and still feel they need to alter their budget. If you are spending more on non-essential items than you would like, a budget can help you hit a new goal of 25% or even higher in savings.
Reduce Your Bills
Now it’s time to reevaluate your budget. Just how necessary are your essential expenses? While everyone needs to pay their electric bill, consider ways you can reduce your energy usage by installing energy-efficient LED lights or turning off your lights more often. This is just one example of a way you can reduce both your essential and non-essential spending.
A great budget should be under constant revision. In time, setting new targets and finding new ways to cut down your bills can even seem like a game. If you’re stuck and need some more saving tips, contact a Blackhawk Bank representative today. We’re available for any questions you may have about your personal or business finances.