Are you having trouble budgeting and then sticking to it? Most budget advice tells you to cut back on your overall spending by carving out non-essential expenditures from different categories. However, sometimes despite all our slicing and dicing, we are still left with the feeling that it’s not working. If traditional budgeting techniques aren’t working for you, try focusing on saving instead. By allocating your savings, you may find a more advantageous approach to budgeting and cut your spending in the process.
The common approach to budgeting recommends that people analyze their spending by category each month. But often this style results in ineffective micromanagement and leaves people missing the big picture. To gain control over your finances, get rid of debt, and control spending, perhaps the better approach is to focus on saving.
It may seem contrary to traditional advice, but if you are saving accordingly, who cares what you spend on? Put your money aside for savings first, and then feel free to buy yourself weekly lattes or dine out. By putting portions of your money into savings and paying down your debts, you’ve officially established a budget for your income! And by doing so, you’ve prepared for your future. Now you no longer need take money from your “entertainment” budget to account for the shoes you bought.
While this form of budgeting alleviates some of the micromanagement, you will still need to focus on living within your means. Everyone has a bottom line.
Save for yourself first
Create a goal for yourself. For example, “I want to save X dollars each month” or “Y% of my income.” To make it easy, set up automatic contributions to your retirement accounts or savings accounts.
Financial expert David Bach, author of “Start Late, Finish Rich,” suggests thinking of saving as paying yourself at least one hour’s worth of income every day. Currently, most Americans save just four percent of their income, which means only 22 minutes of each day is saved for themselves.
When conventional budgeting just isn’t working out for you, don’t give up. Get creative and pay yourself first. You may find it more rewarding and beneficial than pinching every penny.