Many of us could stand to spend a little less money. It’s so easy for all those little purchases to add up over time. Before you know it, your finances aren’t where you would like them to be, whether you’re getting deeper into debt or having trouble saving money for the future. You have to find a way to focus more on being frugal. These steps may help.
Set a Goal
Why do you want to be more frugal? Are you saving up for a particular item or for the long run? It’s helpful to know why you’re trying to save money.
Your goal can be “spend $100 less per week (or month)” or “save enough for a down payment for my next car by (date).” You might be saving for retirement or college for your kids. You might be paying off massive credit card debt or even a small debt.
You may even set multiple goals. Most of us, after all, have several things we should be saving money for, that next car, the kids’ college, a house, retirement. Don’t overdo the goal setting – you want goals you can reach with some effort.
Write Down Everything You Spend
Writing down everything you spend, making a spreadsheet for it or using a budgeting app can really help you figure out where all your money is going. Finding out how much you spend on what seems like small purchases can be a real shock.
Look At Where You’re Overspending
With detailed information about what you’re spending and where, you can figure out where you’re spending too much money. The answer won’t always be a comfortable one, and changes won’t always be easy.
Some people will be able to get their finances into better shape simply by eating out less or going out for coffee less often. Others will need to make bigger changes, such as cutting cable television. There can be hard decisions to make, such as whether you need to find a cheaper place to live, even though moving itself has expenses. Hopefully you don’t have to do anything drastic to get your finances back in shape, but sometimes that’s what it takes.
Make Your Budget and Spending Rules
Now that you’ve reviewed where your money is going, it’s time to figure out how you would like to spend your money each month. Time to make a budget.
Some things are easy to put into a budget, such as your rent or mortgage, and other recurring expenses. Other expenses, such as food and clothing will take more careful thought. You may need to average these out over time to get a good estimate for your budget, and then see how well your budget matches with reality.
Don’t forget that some bills will change by the season. Your power bill may be much higher in the summer, for example, if you have an air conditioner and use it during that time of the year to keep your home more pleasant. Then there are birthdays and holidays that you may spend money on at certain times but not at others. Be prepared for those expenses too.
Such bills can still be a part of a monthly budget, even if it’s an amount your save and roll over until the time comes to spend it. Planning ahead for such things means their costs won’t hit your regular budget too hard.
Don’t Be Too Hard On Yourself
You goofed and spent too much. You’ll be over budget this month, a little or a lot. This whole thing has gone wrong. Now what?
The most important thing to do here is not give up. Look at where you went wrong and why. Could it have been avoided? Was it a self control issue or beyond your control? What can you do to avoid such situations in the future?
Sometimes you may go over budget because you didn’t give yourself enough leeway. You set too strict a budget and just couldn’t handle the pressure you put on yourself. Many people do that. If you make sure that your budget has room for a little fun spending, you can often keep it under better control than if you completely deny yourself that little treat.
It’s often more helpful to give yourself permission to get a small treat occasionally, rather than completely giving it up. Find a reasonable balance for your needs, so that you’re still spending less without feeling utterly deprived.
If things were completely out of your control, don’t feel bad about it. Cars break down at inconvenient times, for example, and it can be very hard on a budget to deal with such things. Ideally, build room for such things into you long term budget, rather than considering it a part of your weekly or monthly budget.
Don’t Give Yourself Too Much Leeway
Being too hard on yourself is often counterproductive, but so is giving yourself too much leeway. Give in too often on the urge to spend money and you may as well not have a budget at all.
If you realize that you are going off budget too often, look at why. Is it a matter of self control or is it a problem with your budget? There are times when you need to take a look at your own behavior and decide to do better. Other times you may have miscalculated your financial needs.
Budgeting Apps Can Help
If you have a smartphone, you will probably find it far easier to track your budget using an app rather than a program on your computer or on paper. This way you’ll always have your budget information with you, right at your fingertips. Here are some popular apps to consider.
Mint is a very popular budgeting app because it can do so much for you. It connects securely to your bank to make it easier to track your spending. It’s made by Intuit, the same company that makes TurboTax®. They use 256 bit encryption and 128 bit SSL to keep your information safe.
The Mint app makes it easy to set up your budget, but it also alerts you to unusual expenditures. It also gives you your credit score for free, which certainly can’t hurt if you’re saving up toward a house or car.
You Need a Budget (YNAB)
You Need a Budget gives you four rules to make budgeting easier. These are give every dollar a job, embrace your true expenses, roll with the punches and age your money. Visit their website to learn more about what these rules mean.
YNAB is free for 34 days, then $5 a month or $50 a year. Students can get a free year by sending in proof that they are a student. Their average user saves quite a bit more than that, so the expense can be worth it. At the very least, you can try it long enough to know whether or not you’re willing to pay for the service.
They offer live online classes every day, help guides, a blog, podcast and YouTube channel to help you change how you think about money. The app syncs with your bank and credit card accounts so that you can keep up with your financial situation.
GoodBudget is an app version of the envelope system so many people have used through the years. It can help you save for big purchases as well as manage your regular expenses. The basic app is free, but you can pay if you want the Plus system ($5 a month or $45 a year) which includes unlimited envelopes, unlimited accounts, use across 5 devices, 5 years of history and email support.
If all you really need is an expense tracker, Wally may be a good choice for you. It’s free, which is nice if you don’t need a lot of extra help. It doesn’t link with your accounts; instead you enter expenses yourself or photograph the receipt. Paid features may be added in the future.