Wednesday, March 28, 2018

4 Strategies for Making a Successful Household Budget #FinancialFreedom

Creating a household budget that is both simple to create and follow can be stressful. Most Americans tend to shy away from budgeting; in fact, a 2016 survey conducted by a consumer finance company revealed that only two out of five adults follow a working budget. If you want to be counted among them, there are a few strategies you can use to create a simple yet effective budget that might help you build savings and protect you against unexpected expenses.

1.      Focus on the Big Picture

You may have tried to make a budget in the past, only to find that unexpected expenses sideline it. While these instances are a fact of life, it can be almost impossible to budget for them. However, there is a way you can account for medical emergencies, car repairs, or other expenses that crop up. Instead of trying to budget for every dollar you make, look at the big picture instead.

For example, if you are trying to budget monthly, map out expected costs like your mortgage or rent payment, car payment, and credit card debt. However, trying to budget for entertainment and other costs that may fluctuate can derail your budget the first time the amount is not what you expected. Instead, consider budgeting for consistent costs and then utilize the rest as a spending allowance. This can help you budget simply instead of trying to account for every dollar you spend.

2.      Choose a System You Enjoy

One of the most important aspects of sticking to a budget is to use a system you will not avoid. For example, if choosing and operating phone apps frustrates you, consider using budgeting software for your laptop instead. If you enjoy the feel of a pen and paper, choose a spreadsheet notebook. No matter which you choose, feeling comfortable can go a long way in helping you stick to your budget instead of avoiding the process.

3.      Revise Often

Because your financial situation can change, it is a good idea to revise your budget every few months to see how successful you have been at saving and whether anything has changed. For example, if you have paid off a major monthly debt or opened a new credit card, you will need to add or subtract these expenses to keep your budget properly updated. Note in your system why a change has taken place in case you need to revisit the details when you prepare your taxes or need proof of a payoff.

4.      Look for Savings Within Your Existing Budget

Creating an effective budget can be helpful for correcting any financial mistakes you might be making. One area that you may want to review is the cost of your car insurance premiums and whether you are missing out on any possible savings. Knowing which insurance mistakes to avoid can lower your premiums, help you find discounts, and increase your spending allowance each month.