Budgeting is easier said than done. Whether you are trying to save money for a big purchase or just get a better grasp of expense management, there are measures you can take to help better manage your spending and take control of your finances. Here are five steps to help you budget better, save more and stay on track with your financial goals.
1. Improve your financial capabilities
Regardless of your financial situation, solid financial capabilities are the foundation of successful budgeting and money management. At every life stage, there are measures you can take to continue sharpening your financial skills, which will help you stay within your budget.
As adults take on more financial responsibilities, expense management grows in importance and complexity. Learning how to build a financial foundation is a key first step in managing a growing budget. When deciding what’s a “nice-to-have” and what’s a “need-to-have,” it’s important to build a habit of researching and analyzing all major financial decisions.
2. Learn to manage your emotions along with your money
It’s no secret that money and emotion go hand in hand. Money can impact our stress levels, mental health and personal relationships. In fact, according to a recent study from MarketWatch‡, 2 out of 3 (65%) Americans say personal finances are their biggest source of stress with 92% saying financial stress has caused negative physical effects like loss of sleep, headaches and more. There are steps you can take to better separate your emotions from your money, which in turn can help you become more confident and less stressed about your financial future.
Checking in and updating your goals is an important part of managing your money and protecting your mental health. Whether you are already on a solid financial path or are just beginning, it is always a good idea to meet with your banker or find a trusted financial advisor. A banker can help keep you on the right track, whether you are looking to manage your debt, balance your budget, save up for a big purchase or get ready for retirement. They can help review your budget and financial roadmap and update as necessary so that your emotions are more manageable when significant life events happen.
3. Analyze ways to trim expenses
There is no better time than now to evaluate your previous spending and identify areas where you could limit spending moving forward to maximize your budget. According to the latest U.S. Bureau of Labor Statistics’ Consumer Expenditures Survey‡, Americans spend more than $6,000 a month on items including housing, transit, groceries, healthcare, dining, entertainment and more.
When looking for ways to cut back on these expenses, consider simple changes like cutting back on entertainment purchases or eating out. To make this exercise more enticing, you can set challenges for yourself like “no-spend” months when you avoid non-necessary spending, or saving a certain amount each week of the year.
To get a personalized look at your expenses, consider using a budgeting app or using financial calculators that can help you address common financial challenges and questions around housing financing, college and retirement savings, budgeting and more.
4. Always be prepared for the unknown
While active budgeting is vital for managing money on a week-to-week or month-to-month basis, you should also set a plan for future financial health. Start by consistently saving for both planned and unexpected large expenses.
Track your spending and sort costs into different categories, which will help you find areas that you can spend less and redirect those dollars into savings. For example, if food and meal deliveries are costing $100 every month, cutting them out can help build funds faster.
While it can be hard to withhold money from your budget for a possible future emergency, make these savings a mandatory part of your expense management to avoid undue stress in the future. It can be very tempting to spend money on something fun or interesting instead of depositing it in an emergency fund. However, without that reserved cash, you won’t have extra funds to lean on when you really need them.
5. Conduct a financial review
A financial review is a simple way for you to better understand the current state of your finances. It can help you develop valuable insight into changes or adjustments that might be needed so you can meet your goals. A key benefit of a financial review is transparency. When you regularly check in on your income, debts, investments and other financial obligations, you have a clearer picture of where you stand and can better implement expense management.
Tracking your income, fixed and variable expenses, investments, debt and future costs is the foundation of a financial review. To complete a review, tally up all of your expenses by going through all of your financial statements—including your banking, retirement, student loan, credit card and mortgage statements. By doing so, you can build a budget that reveals where you can and should reduce your spending.
While it is ideal to complete a financial review annually, it can be time-consuming. If you don’t feel comfortable completing such a comprehensive review on your own, schedule a meeting with a financial professional to work through your budget. Checking in more often is another way to keep your finances front and center, and reducing the amount of time it takes to update your current state.
By taking stock of your income and expenses, you can create a functional budget that will help you manage, save and control your finances.
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