Feel Financially Confident: 6 Tips for Budgeting Success

By Sarah Herwick

If you have a monthly budget, congratulations – you’re rare! Only 28% of Americans have a written financial plan.

But do you ever have difficulty sticking with your budget?

The are many benefits of following a budget, including:

• reducing your debt

• creating a savings fund for emergencies

• achieving your short- and long-term financial goals

• creating peace of mind because you’re financially stable

(Note: If you don’t yet have a budget, please read our blog “5 Simple Steps to Creating Your Budget” to get a start.)

Because sticking with your money plan is vital to your financial success, consider the following six tips for budgeting success. And remember, our team is always happy to assist you in a one-on-one consultation.

1.   Be clear about your major goals

Sticking with your budget becomes easier when you remember why you’re doing it and when you’re emotionally invested in the goal. If your goal is something you really want to happen, remaining focused on your plan and recognizing small achievements will bring you a greater feeling of accomplishment, leading to more long-term success.   

Often, a long-range goal of budgets is to pay off debts and remain debt free. This goal is worthwhile because once all your debts are paid, you can use the money you’d been using to repay debt to ramp up your investment strategy and other financial goals.

Other goals could be saving money to start a business, accumulating funds for a down payment on a home, retiring comfortably, or paying for your children’s college education.

Pro tip: Create a visual reminder of your principal goal and post it where you’ll see it daily.

2.   Track your budget in an app or spreadsheet

Accounting for your spending helps you stick with a budget. When you see how much money you’ve spent and what you’ve spent it on, you can deduce the habits that have a negative impact on your budget.

To keep track of your spending, I suggest using a budgeting app. There are many apps available, from those that use zero-based budgeting (where every dollar is accounted for) to those that use envelope-based systems to programs for budgeting with a partner. Some apps require that you link all your accounts to the app, while others don’t require linkage.

While the other Allegiant team members and I don’t recommend a specific app, we have clients who use Mint.com and Dave Ramsey's EveryDollar Budgeting. For a solid overview of the best budgeting apps, check out this article from Nerdwallet.

What’s most important about budgeting apps is to pick one that is flexible and easy for you to use because if it is difficult, you won’t use it!

If the technical app route to budgeting isn’t for you, consider using a spreadsheet to stay on track with your budget. The good news is that you don’t have to start from scratch. This article from Nerdwallet offers several free budget spreadsheet templates.

Pro tip: Keep every receipt to easily verify each transaction in your app or enter it into your spreadsheet.

3.   Think before you buy

When you're following a budget, it's essential to consider every purchase before you proceed. One of the critical factors to keep in mind is the difference between wants and needs.

Needs are essential items that you must have, such as food and housing. Wants, on the other hand, are things that you can live without. It's important to differentiate between the two because overspending on wants can quickly derail your budgeting success.

One way to help you distinguish between wants and needs is to list your essential needs and prioritize them over your wants. This can help you budget your money more effectively and ensure you prioritize your critical needs. Additionally, keeping a close eye on your spending habits and adjusting as needed can help you stay on track and avoid overspending on non-essential items.

Pro tip: Pause before making a purchase. When you wait a few days before buying something, you can determine if it's really something you need or an impulse purchase.

4.   Save and spend automatically  

Another way to stay on budget is to set up automatic payments towards monthly bills, debts, and savings. Automating these transactions removes some of the temptation to overspend (you’ll still need the willpower to avoid impulse purchases!).

Another benefit of automating your finances is that it can help you reduce stress and anxiety around money. When you know that your bills are being paid on time and that you're making progress toward your financial goals, you can focus on other important things.

Pro tip: Set up automatic increases in your savings contributions. Start with an amount you're comfortable with and gradually increase it over time. Also, whenever you get a raise or bonus, increase your savings contribution by the same percentage. You’ll save more without feeling like you're missing out! 

5.   Play hard to get with your emergency fund

If you tend to spend impulsively, it’s a good idea to make sure your emergency fund isn’t easily accessible. For this situation, I suggest you look for a savings account with no minimum deposit and a solid interest rate. Shop around at local banks and credit unions, or look at online banks.

Some of our clients use the CapitalOne, Performance Savings account, which yields 3.50%. Others use an Ally savings account which yields about 3.75%. My Allegiant colleagues and I can’t recommend one savings account over another, so I suggest you review several to find one that best fits your scenario. Check out this Nerdwallet article that rates different online banks for more information.

6.   Schedule a monthly financial check-in

Once a month, evaluate if you’re staying on budget. This regular financial check-in can help you stay on track and tell you where to make any necessary budget changes. You’ll discover if you’re spending more than anticipated in one category or if your spending is lower than expected in another. Then you can make adjustments for the next month.  

A monthly financial check-in can also be a way to celebrate your progress. By reviewing your financial statements and seeing your progress, you can feel good about the steps you're taking toward your financial goals. Whether paying off debt, building an emergency fund, or saving for a big purchase, evaluating your finances each month can help you stay motivated and on track. 

Pro tip: Make your financial check-in a habit by setting aside a specific day and time each month. Consider scheduling it when you're likely to have uninterrupted focus and energy, such as on a weekend morning or a quiet evening. 

Remember, budgeting is a process, and you may make mistakes or encounter setbacks. The important thing is to keep moving forward and learning from your experiences.

The entire Allegiant team is here to assist you with budgeting. Contact us for a free consultation at 269-218-2100 or here.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to ensure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

Allegiant Wealth Strategies offers securities and advisory services through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Allegiant Wealth Strategies has offices in Battle Creek and Portage, Michigan, from which we serve Calhoun County, Kalamazoo County, and Kent County (Grand Rapids). The Allegiant Wealth Strategies team offers no-obligation financial planning consultations; call 269-218-2100 or contact us here.