Living life on a budget doesn’t mean you have to stop living. Unfortunately, we often think a financially frugal lifestyle means sitting at home while our friends are out on the town. Or that we’ll need to resort to eating macaroni and cheese while our friends wine and dine decadently.
The truth is, you can still enjoy life while being financially responsible. Does that sound too good to be true? It’s not. Using simple strategies, you can learn to spend smarter instead of not spending at all. With a few financial tips, you can manage your money without feeling deprived.
Monitor Your Money
In order to manage your funds, you need to monitor them. This involves tracking your spending. Whether you use a budgeting app on your smartphone, a spreadsheet, or a notebook, keep a record of money coming in and money going out.
Review your spending on a weekly basis. It’s quicker and easier than going back to review a whole month’s worth of money. Also, using a weekly system makes it easier to catch instances where you may have overspent. To compensate, it’s more realistic to live lean for a week to make up for a previous week’s expenses. If you’ve been overspending for a month, it will be a lot harder to catch up.
Take Charge of Your Finances
Monitoring every dollar you spend can be a rewarding process. Divide your after-tax income among needs, wants, savings, and debt repayment. Make these financial choices for each month with your partner, family, or on your own during some quiet time. Consider making thoughtful financial decisions in advance, instead of rushed reactions in the moment. Taking charge of every dollar can quickly make you feel confident about how and where you allocate your funds.
Eliminate Extra Expenses
Take some extra time to review your expenses. Are those $4 lattes every morning really needed, or can you manage making your own at home instead? What about those dinner dates with friends and weekend trips to the movies? The treats quickly add up, and you may be surprised how much you’re actually spending each month until you write it all down.
Determine what you value and what you can’t live without, so you’re not living a life you despise. Instead, cut unnecessary spending. Are you dining out too often, subscribing to streaming services you aren’t using, or paying for an unused gym membership? Eliminating these costs, especially ones you don’t use or care about or won’t miss, will free up funds for the luxuries you truly enjoy.
Set Up Automatic Savings Transfers
Financial experts often suggest living on at least 15% less than what you earn. This allows you to tuck away a good chunk of money from each paycheque in order to create a financial buffer. Doing so will give you a “rainy-day fund” for unexpected home repairs, a medical bill, or to contribute to a vacation you’re saving up for.
Connect with your bank to set up an automatic transfer from every paycheque. This way, a set amount of money will be transferred to your savings account every payday, before you’re tempted to spend it. And because the transfers are automatic, you’re less likely to miss that money. But when you look at the growing amount you’ve been tucking away, you’ll definitely recognize your savings.
Keep Paying Monthly When You’re Debt-Free
After paying off a large expense such as a car, mortgage, or student loan, you’ve likely become accustomed to making monthly payments. So why stop? Continue making the same monthly payments you’re used to, but direct them to a savings account with a good interest rate.
These savings will accumulate, along with your paycheque contributions, and the next time you need to make a large purchase, you won’t have to use credit. You can leave the store feeling empowered about not having to finance the purchase – which is the opposite of feeling deprived.
Live Off a Single Income
Many families with two sources of income will budget a more lavish lifestyle based two paycheques. But have you considered living off just one instead? While it may not be feasible for every family, having just one salary paying the bills can create financial freedom – and savings.
While one salary pays the bills, the second can be diverted entirely to savings. These funds can help families save for retirement, post-secondary education, or even the unexpected costs that come with a layoff or a similar life-changing event.
Keep Finances Top-of-Mind
Ultimately, anyone can develop financial discipline. It just takes a willingness to change and develop new habits. And when you do, your financial situation will take a turn for the better. You’ll find yourself with more money in savings, and additional financial security for you and your family.
Be sure to revisit your budget as you go along. With life comes change, and your expenses can be expected to fluctuate from year to year, or even month to month. Keep track of your spending and make modifications along the way. The goal is to create a budget you’re happy and comfortable living with, one that helps ensure that your money is working for you and doesn’t leave you feeling like you’re missing out on life.
Michelle Novielli | Contributing Writer