Budgeting is like eating healthy or exercising. We know we should do it; people urge us to do it all the time; and yet, for many, it is still difficult to make a firm commitment. It ends up being one of those things we are always putting off until the next day, or we do it in fits and starts.
You can end that cycle today by promising yourself that you will take small action steps and make a positive difference for yourself and your loved ones. To help you get started, here are five tips to make the budgeting process more engaging and effective.
Tip #1: Make Budgeting Fun
Can budgeting be fun? I am here to tell you, yes, it definitely can be. How? By making it into a game—one that ignites your brain’s reward system when you make progress or reach a goal. There is a name for this concept: Gamification. Essentially, it means you incorporate the elements of game design into everyday life in order to produce a desired outcome.
Here’s an example: A few years ago, safety officials in Sweden posted cameras along the roads to monitor the driving speed of passing cars. They then announced a contest: Every motorist who drove at the speed limit or below became eligible for a prize. The result was a 22 percent drop in speeding in the first week.
Today, businesses use badges, buttons, reward points and other gamified incentives to help consumers make better choices. By incorporating this concept into your budgeting (awarding yourself luxuries after reaching goals, for example), you can enjoy the process and be motivated to stick with it.
Tip #2: Simplify Budgeting with Technology
One of the primary reasons we stop paying attention to our household budget is that the process seems painstakingly difficult. Fortunately, new software applications have made this infinitely easier, and far more enjoyable.
Moreover, the latest mobile budgeting apps offer deep analysis into your spending and saving habits, and can provide tailored advice on how to improve your budgeting practices. These apps help save time for busy professionals.
Tip #3: Learn the Connection Between Your Financial and Emotional Well-being
Financial insecurity is a terrible thing for anyone to deal with. No one wants to toss and turn at night worrying about having enough money to cover their expenses and pay their mortgage. Smart budgeting, practiced consistently, is a great way to help avoid this. If you have a firm grasp on your cash flow coming in and what you spend, you will be in a better frame of mind and feel more in control of your financial life. Your anxiety and stress levels will also be greatly reduced.
Tip #4: Audit Your Budget Periodically
When it comes to finances, the numbers tell the story. If you have had some financial problems in the last year, the reasons why can often be found in your budget data. On the other hand, if you have had a great year, patterns in your budget will reflect this.
By auditing your budget at least once a year, you will have a better understanding of your spending and saving habits and make any necessary adjustments.
Tip #5: Budget for the Future
Smart budgeting is not something that is done month-to-month. By projecting into the future, you can see if there is anything looming that could necessitate cutbacks or additional saving. Having five-year budgeting goals also dovetails nicely with other five-year plans for your financial, professional and career goals.
Your Next Move
Budgeting is too important to ignore and should never fall by the wayside because of lack of time or tedium. I encourage you to incorporate these five ideas into your household budgeting for a solid financial foundation. This way, you will be able to save time and money, as well improve your quality of life in the short- and long-term.
Contact me today to learn more about financial literacy and a building a prosperous future.