Most people understand the importance of putting together a financial budget. However, most budgets ultimately fail, or never reach their full potential; this is often because their creators don’t budget consistently enough. They draw up plans for their financial future, but only stick to their guidelines for a month or two before giving up. Or they have firm rules in place, but they bend or break those rules the moment they become inconvenient.
What steps can you take to budget more consistently, and improve your personal finances?
Be Honest About Your Motivations
First, be honest and upfront about your motivations. Why are you establishing a budget? Is it because you genuinely want to build a better financial future for yourself? Or is it just because this is what you’re supposed to do? You have to genuinely want to improve your financial situation if you’re going to be successful when budgeting. If your motivations come from some external place, or if you don’t truly believe in them, you’ll face a higher risk of failure.
Utilize a Digital Assistant
Second, utilize a digital assistant. Money management is much easier when you have an app that can give you personalized spending breakdowns, and an AI you can consult when making decisions. For example, rather than turning to your budget and crunching numbers to determine whether you can afford an indulgence (like getting a pizza for dinner), you can simply text the question to your digital assistant. It streamlines the budget process, and makes it both easier and more entertaining to follow your own guidelines.
Too many people start with a comprehensive and oppressive budget that immediately kills their motivation. For most people, it’s better to start small and improve from there. For example, rather than rigorously restricting all forms of spending, consider reducing your monthly entertainment budget by just $50. Instead of formally documenting every cent you spend, start tracking just one category of expenses. Once you build momentum with a smaller, more manageable budget, you’ll be able to transfer those behavioral patterns to a bigger one.
People perform best when they have both intrinsic and extrinsic motivation. In addition to pursuing financial wellness for your own personal benefit, you should consider establishing a tangible reward for yourself. For example, if you consistently save $500 a month for a full year, you can treat yourself to a $1,000 mini vacation. It’s a great way to stay on track, and at the end of your journey, feel like all your efforts were worth it.
Focus on One Day at a Time
It’s easy to feel overwhelmed when you think of your personal finances as unfolding over the course of years or decades. So instead, focus on just one day at a time. How much money do you have to spend today? Is there a way to reduce your spending on unnecessary items, like by packing your lunch rather than going out to eat? It’s much easier to follow your goals when they’re on a smaller scale.
Publicly Announce Your Goals
Some people are uncomfortable talking about money in public, but it’s a good idea to publicly announce your goal—at least in some form. For example, you don’t have to tell people that you’re $14,000 in debt, but you can tell them that you’re planning to pay off your debt within 2 years. Stating a goal publicly instantly holds you more accountable to it; it makes the goal feel more real, and invites support from the friends and family members who want to see you succeed.
Get Your Family and Friends on Board
Speaking of friends and family members, consider getting them on board with their own personal budgets. If you have a social circle that values personal finance as much as you do, you’ll be much more likely to stick to your own plans. It’s a form of self-perpetuating positive peer pressure that can ultimately put you all in much better financial positions.
Understand the Triggers That Make You Deviate From Your Plan
Even after you commit to a budget and make plans to be consistent with it, there’s a chance you’ll deviate from that plan. If and when this happens, work to understand the triggers that led you to this deviation. Were you feeling especially sad or angry when you made this purchase? Was there an environmental influence that led you to this? Try to eliminate the influence of these variables in the future.
Budgeting consistently is a challenge even for people who are self-motivated and enthusiastic about personal finance, so don’t feel bad if you’re struggling. With these strategies, you should be able to put a much better budget in place, and follow it consistently until you reach your goals.