5 Easy Changes To Help You Budget Better

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changes to budget better

Everyone has goals and dreams that they’re saving for. Perhaps you’d like to own property one day. Maybe you’d like to save enough to send your child to college or pay off your own student loans. Perhaps you’d simply like to clear your credit card debts.

Whatever your financial goals, you need to have a solid plan in place. Remember that once you do the work of setting well-defined, incremental, achievable goals, you’ve already made serious progress.

Below, we lay out 5 key points on our all-star personal budgeting plan. Stick to these, and you’ll be well on your way to personal financial success.

1. Track Your Spending

This rule is first on our list for a reason. It can be very difficult to successfully monitor your own spending without a little help. Apps such as YNAB (You Need a Budget) are extremely helpful with this. They not only track what you spend your money on, but based on preset budgeting limits, they will warn you when you’re close to hitting those limits.

2. Pay Debts in the Right Order

Debt comes in different shapes and sizes. Often, we have large, long-term low interest debt, such as car payments and student loans, and then we have short-term, high-interest debt such as from credit cards or payday loans. The key here is not to fixate on the large debts because the interest rate is low — it’s designed to be paid off over time.

Instead, pay off the smaller, high-interest debts first. Many people think that small amounts can be ignored and easily paid off the following month, but this is wrong-headed thinking. Paying down or paying off your short-term loans each month to avoid the high interest means you’ll be breaking bad money habits and saving more money.

3. Save Using the 50/30/20 Rule

This rule was made popular by Senator Elizabeth Warren and it has helped a great number of people save for the future. The rule states that 50% of your after-tax income should go toward necessities such as your rent or mortgage, your utilities and fuel costs, and your grocery bills.

30% can be saved for entertainment and luxury items that you might want, but certainly don’t need, and 20% should go toward your savings and investments. This is a great tool that helps you save without depriving yourself.

4. Use the Envelope Method

If you have bad credit card control, this tip might be the one for you. Above, we said that 30% of your after-tax income can go to luxury items and entertainment — but for some, finding the self-control to limit spending to that benchmark can be tough.

Consider setting aside the cash in an envelope and never using your credit card. When the envelope runs out, you know you’re at your limit for the month.

5. Reward Your Progress

This one might seem counter-intuitive, but the key to long-term success is rewarding progress. As you successfully begin to save and plan based on the tips above, do something for yourself every time you hit a monthly milestone.

It doesn’t even have to cost much — even a small gift to remind yourself that you’re on the right track can be a great ego booster.

And there you have it. If you’ve had the desire to take control of your spending and saving habits, but didn’t know where to start, now you can get on the path of personal financial success with these 5 tips. You’ll be a budgeting pro in no time at all.