There is no better time than now to refresh your budget. If you don’t have one, don’t wait to get one started. According to Nerdwallet, the average American household has over $7k in credit card debt as of 2019. During this time at home, you hear about everyone organizing their homes and purging their closets. What else is there to do right? Wrong. Your finances and especially your budget need some TLC too. If you don’t have a personal budget, you probably realize you most definitely need one. If you already have a budget that has been collecting dust, now is the time to revisit and refresh your budget.
Below are five ways to refresh your budget so you can keep your finances on track.
1. Get down to basics
We all have expenses that can be slashed from our daily expenditures. Take the time to go through all the purchases you make in a day as well as those recurring automatic debits you have set up with your checking account. Too many take out dinners and that gym membership you aren’t using should be slashed. Start meal prepping and only stick more to the essentials. Especially during an uncertain time like now. This is a great starting off point to refresh your budget.
2. Update your spending limits
If you have lost your job or have been furloughed, you definitely need to refresh your budget. Any time your income fluctuates, so should the spending limits you have set for your budget categories. Go through each one and see if your spending is keeping in line with the limits you have set up. You may find that you are exceeding your spending limit for groceries and need to make an adjustment.
3. Do your values match with your spending habits?
You work hard for your money, so it is important that you pay attention to how you spend it. Often, people can spend their hard earned money without too much thought and the next time they check their bank account, they are in the negative. How you spend your money should be a direct reflection of what you say is most important to you.
For example, if you find that a bulk of your disposable income is being spent on clothes but your true desires are more centered around traveling, it is time to adjust your budget. In order for you to have a better chance of sticking to your budget, you need to make sure your budget has a line for fun stuff.
4. Find the right budgeting method
If you struggle to keep up with your budget, it may be time to switch methods. There is the popular 50/30/20 budgeting method that splits up your income into three spending categories, the zero-based budgeting method which will have your income and total amount spent at zero by month’s end. There are also plenty of other budgeting methods from the envelope system to the half-payment method.
5. Find the right budgeting tools
In order to be successful at sticking to a budget, you need to be equipped with the right tools. A great starting point is to have a budget binder to keep all your important documents. Items like your spending spreadsheets, debt tracker, bill due dates etc. In addition, you should look into budgeting apps. The right app can really make all the difference in your staying on track with your budget.