How to Make Budgeting a Habit

Almost every time I talk to someone about BudgetSimple, I get a similar reaction “Oh wow, I could definitely use that, I can never stick to a budget”. Sticking to a budget seems to be a pretty common thing. You start one often, but keeping to the plan more then a month or two is as difficult as sticking to a diet. I’m sure it’s different for everyone, but I wanted to share how I’ve stuck to a budget for the past ten years.

When I started my first budget in 2002, my finances were dire. Rock bottom for me was having to call my credit card company to have my limit raised because I needed auto repairs and had no savings, maxed out credit cards, and was in danger of being laid off. Maybe everyone has to hit to rock bottom point to get their finances on track, but I hope not. The first thing I did was set a goal for myself.

My goal was to have my credit cards paid off in a year. I believe goals are key to sticking to a budget. Goals are a way to measure your progress, and you can see the impact of every decision affecting that goal.

When you create your goal (assuming you are not using the BudgetSimple Plus Savings tool), look at the amount you need to save, and divide by the amount of time in months you need to achieve that goal. So in my case, I had $6,000 on my credit card, and wanted it paid off in a single year, so I needed to put away $500 a month to it ($6000 / 12). This isn’t exact, since there is interest accruing, so really it would take a little more then a year at $500, and so I made my goal $550 per month.

The next step was to factor this $550 into my budget. At the time I was making around $30k, so $550 wasn’t the easiest amount of money to come up with. But when I created my budget I did see it was possible to save that amount each month. From that point on, the very first bill I paid each month was my credit card, for exactly $550. After that, I tried to make the rest of the finances work. What happened was by the end of the month I started having to make tougher decisions. There was a lot of ramen eaten. Some months it took extra side jobs to get the money together, but I did anything I could to avoid regression (the goal graph going up instead of down).

So set a goal today. Just one for now. Everyone has a goal, maybe it’s saving for a house, a wedding, a down payment on a car, school, etc.. Set your goal, and figure out what it will take to achieve it. Make that your first payment every month, and monitor that progress each month, and you’ll start getting motivated by watching that goal being achieve (to the point where paying extra towards the goal will be as rewarding as shopping for new clothes!).

HOW IT WORKS
HOW IT WORKS