You’ve worked out your weekly or monthly budget but you still find yourself running short of money long before the week or month is up.
What’s going on?
Here are 4 common budgeting issues that we all tend to struggle with and how to tackle them.
1. Master the detail
It’s not enough just to set a budget, you also need to schedule regular ‘budget time’ where you review how much you’ve spent and on what.
Understanding what you’re spending money on, in detail, will help you make informed decisions and cut back if you have to.
2. Make sure to have a rainy-day fund
A rainy-day fund is a small amount of cash which will help tide you over if your income suddenly drops or you face a big bill.
Having a rainy-day fund means you don’t need to borrow money quickly and you can remain financially independent.
3. Match your budget to your personal goals
When you do your financial planning, you need to be guided by your personal goals.
For example, you might want to save so you can go traveling next year or you might want to save towards going to college or buying a car.
The steps you take to meet that goal should be incremental and allow for life’s little hiccups.
So, if you know how much you need to save and you plan to save a specific amount of cash, each month, it’s important to be realistic and allow for a short (one or two-month) break from saving due to things you can’t foresee, today.
That might mean saving for longer or saving a higher amount each month just to be sure.
If you factor in the unexpected, your plan will have a much higher success rate.
4. Be honest with yourself
It’s not unusual for people who set out to establish a personal budget to fail because they are in denial about some of their spending habits.
For example, you might have a weakness for splurging on online shopping or gaming.
These weaknesses can be embarrassing to admit, even to ourselves, but we need to be honest and take them into account when making a budget.
Otherwise, our spending and saving plans won’t stand a chance.
What’s next?
Now you have some essential budgeting tips, best of luck on setting and reaching your savings goals.
The information contained in this article has been prepared by Bank of Ireland (“BOI”) for information purposes only and is not meant as advice. BOI believes any information contained in the article to be accurate and correct at the time of publishing.
