The point of budgeting is to be able to afford the things we want and need, while also creating a plan for the future: a nest egg, a home, children, and retirement. However, being smart with your money doesn’t mean you need to deny yourself all the things and experiences you love. Here are a few ways you can budget smarter and still afford to treat yourself.
Decide What Your Priorities Are
Most people’s essential expenses revolve around food, shelter, and transport: your weekly/monthly food shops, your rent/mortgage payments, and public transport/petrol, car payments, and insurance. Together, these essential expenses should tally up to half or two-thirds of your income. The rest should be portioned off according to your priorities, such as saving, paying off debts, and taking care of house and professional expenses. You can then allocate a budget to entertainment, which brings us to the next point...
Set Aside a Little Money for Luxury and Leisure
We all work hard so that we can live a little. If you don’t spend some of your money getting out with friends and experiencing new things and new places, you’re just going to make yourself miserable. And misery fuels emotional impulse buying. Just make sure you stick to a budget and save up for those more expensive adventures so you don’t end up swiping your credit card too often.
Roll With the Punches
Even if you create a detailed budget, you can’t always predict with certainty where your money will go. Accidents happen and it just takes one flat tyre, a dental filling, or a birthday gift that costs more than anticipated to set you back. This is why your budget should serve as a guide more than an ironclad law so that if you break it, it’s not the end of the world. Leave yourself a little wiggle room to roll with life’s punches.
Assess Your Budget for Leaks
For two to three weeks, keep a detailed record of everything you spend money on. It’s easy to forgive yourself for the odd indulgence, but when you see how often those “one-time indulgences” happen and how much they drain your finances at the end of the month, it might provide you with the perspective you need to tighten your belt a little. A spending diary will help you assess your budget for unnecessary leaks, such as cab rides, lunches out, café-bought coffee, magazine subscriptions, snacks for the road, etc.
Steer Clear of Temptation
No one on a diet stands in the snack aisle of their super market and stares at all the chips, chocolates, and soft drinks. So, if you’re trying to stick to a budget, avoid your favourite shops and steer clear of the places you tend to spend money. For entertainment, head out and away from the retail traps and go for a hike or to the beach instead.
Save for the Things You Want
Even if you’re on a strict budget, you should still be allowed to enjoy your money. However, rather than pulling out your credit card to pay for the item or experience you want, put aside a little each month until you have enough to afford it. Then you can load that money onto your credit card and pay. This won’t only save you from wasting money on exorbitant credit card interest rates, but you’ll also enjoy the reward so much more because you worked and saved hard for it.