Easy Budget Tricks for Controlling Your Spending
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Get Real With Your Spending
To control your spending your first must know how much you actually spend and what you are spending your money on. "Most people have no idea what they are spending on things like fast food and coffee for the month," notes Herigstad. She recommends that you collect all of the receipts for your spending for a full month and calculate your total spending and totals by category. Credit card statements with a list of your charges for the month can help put together your total spending picture. This exercise alone may show you one or more areas where you spend too much money and you could easily cut back.
Draw Up Two Budgets
Herigstad recommends to her clients that they draw up two different budgets. The first budget is a bare-bones, minimum-spending-to-survive budget. "This is a liberating experience," she says, "when you find out how little you actually need to live on, compared to what you are actually spending." You can visualize your bare bones budget by imagining that your income was severely reduced and you had to get by on the least amount possible.
The second budget is one that reflects how you really want to live. This one includes money for the things you like to do like dining out, going to the movies or picking up that morning coffee. "Do not be too stingy with the second budget, but make sure the total spending is less than your monthly take-home pay," recommends Herigstad. The difference between the two budgets should show you that you can spend money on yourself without going overboard with the spending.
Budget Together or Fail
If you are part of a couple who combine incomes and spend out of the same pool of money, it is critical to work together to change your spending habits. "It is a waste of time for just one side of a couple to try to budget," notes Herigstad, "It is like two people in a rowboat and only one is rowing on her side of the boat. It doesn't work." As a couple, both of you have to agree to sit down, discuss your spending habits and work together to develop a budget that you can agree on. This can be a very difficult "trick" to master, since each side must be truthful about their spending and be willing to give some compromises to what the other person wants to do.
Budget Toward a Reward
"Budgeting just because you feel bad about your finances doesn't work," notes Herigstad. "You need a goal to stay motivated to follow a budget or spending plan." A goal or goals change out-of-control spending into following a budget so that you can save up the money to spend on things that are important, like a nice vacation or the down payment on a new car. Herigstad emphasizes that controlling spending with a budget should not be viewed as a punishment but, instead will actually allow you to spend the money you earn on things you really want. Turn your out-of-control spending into goal-focused spending.