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Today I am excited to have Alerie from Girl Meets Wealth write about how to achieve your budget goals! She posts about personal finance and wealth accumulation on Instrgram. Take it away Alerie!
Hello y’all! My name is Alerie
Hello y’all! My name is Alerie Sebastian, also known as @girlmeetswealth on Instagram. I just recently graduated from UT Austin with a master’s degree in accounting. I am a management consultant who lives in Austin, and I also work towards educating others on financial literacy through the power of social media.
My goal is to make an impact on as many people as possible. Everyone deserves financial freedom. We can achieve this through financial literacy and budgets.
How to Stick With a Budget
During the current pandemic, many Americans are focusing on their finances. A lot of people have created budgets for themselves before. However, how many people actually stick to their budgets? Budgets are simple in theory, but they involve more than just looking at your income and expenses. Like everything else in life, it is easy to start something, but it’s difficult to actually stick to it.
With your budget goals, are you setting yourself up for success? Or, are you setting yourself up for failure? If you are not reaching your budget goals, there are many things you should ask yourself to keep you in check
Does it take too long to update my budget?
Does keeping up with your budget take too much time? If so, you’ll likely give up because your budget is not worth your time.
Make a budget process that is easy and convenient for you. For example, you can use software like Excel and automate all of your calculations. Also, you should update your budget often. You can create a budget routine where you update your budget every few days or even every time you spend money.
Am I willing to change my habits?
With your budget, you may have to cut back on certain habits. You must ask yourself, “How badly do I want to achieve my budget goals?” Ultimately, your finances are up to you and your daily habits. Anything is possible if you are willing to put in the effort and make changes.
Your budget will work if your actions reflect it. For example, if you usually go out to eat 4 times a week and spend $80, but you make it a goal to cut back and only spend $40 a week by eating twice a week, you must be willing to do just that. By giving one thing up, you must replace it by doing something else. By cutting back on take-out, you must be willing to cook more.
Convenience comes at a price. If you’re not willing to change your habits, you’ll just be in the same financial scenario you were in before your budget. Change isn’t hard if you’re dedicated about achieving your budget goals! Remember why you created a budget in the first place!
Are my goals attainable and is my budget realistic?
You must take a step back and ask yourself if your goals are attainable in the timeframe you planned. If you make it too difficult to achieve your goals, then you are more likely to give up. You have to work the numbers in your budget and see if they are able to support your goals.
Don’t cut back on your goals! Just remember that it may take longer than you originally planned. As long as your budget allows you to be one step closer to your end plan, that is what matters.
In addition, you must ask yourself if your budget is realistic. Although everyone wants to spend as little as possible, we have to be reasonable. In our budgets, we need to allocate practical amounts for the categories we create.
Although I wish that my groceries cost only $20 a week, I would be setting myself up for failure if I put that in my budget. Instead, I budget $50 every week for groceries. Put numbers that make sense!
Do I budget expenses for fun, entertainment, and personal spending?
If we take out all of the fun in our budgets, we will for sure fail. We are human, after all! It’s entirely possible to reach your budget goals and have a “fun” allowance.
For example, I am a coffee lover and I love going out to coffee shops. I used to buy coffee almost every day! I knew it would be unrealistic for me to completely cut out coffee shops, and so I budgeted myself $10 every week so I can go to my local cafes.
I was able to significantly cut back on my coffee expenses by creating a more realistic goal for myself. If I didn’t budget a “fun” expense for myself, I would have likely cheated with my budget. It’s okay to spend money on non-essentials! Just make sure if fits your budget!
Do I make adjustments to my budget? Does my budget reflect my life?
When we create budgets, especially in the beginning, we are only making estimates. As we see our actual income and expense numbers, we have to see if we need to make certain adjustments to our categories. It’s okay for your budget to change!
Your budget is not static. Your life cannot be 100% planned out. It’s necessary for you to make adjustments to your budget so that you can more accurately depict your habits.
Keep in mind that you should increase or decrease your categories if it makes sense! For example, just because you splurged and bought a lot of makeup, that does not mean that you should increase your budget in that area! When you track and reconcile your budget, you need to assess if you have to make adjustments in your budget categories and your habits!
Another thing to think about is to see if your budget reflects your life. Let’s say you’re preparing your budget for the next month. If you know your hours are getting cut, make sure you reflect that in your budget! Or, another example could be that since many grocery stores have increased their prices due to the pandemic, you have to then increase your groceries expense category to reflect that.
We must change our budgets as our lives change. Doing so will allow us to achieve our budget goals.
Am I forgetting expenses?
Although we know the typical expenses we incur on a monthly basis, like utilities, groceries, cell phone, and so on, there are many expenses that people often forget about.
Do you pay for HOA fees? Property taxes? Income taxes? You don’t want to be surprised by these expenses, especially the ones that are thousands of dollars. Make sure you keep track of all of the expenses that occur during the year and consider making sinking funds for those areas so that you’re fully prepared for when those expenses are due.
If you aren’t reaching your budget goals, you have to constantly monitor yourself and see what you have to change. Keep yourself accountable and ask yourself how you can improve your habits and your budgets.
Budgets are a powerful tool if used correctly. If your budget isn’t working for you, don’t give up. Make adjustments and keep trying to achieve your budget goals. Soon enough, you’ll be a budget pro!