The idea of budgeting may make your eyes sparkle.
Yet they are essential to achieving financial wellness.
“It’s really hard to make any plan or progress if you don’t know where your money is going,” said Chris Browning, creator and host of the Popcorn Finance podcast. In his short podcast, Browning discusses financial topics like investing and managing your money in the time it takes to make a bag of popcorn.
He said, “Refer to it as something else if you don’t like the word budget.”
More than invested in you:
Suz Orman: Here’s How Couples Should Allocate Their Money
How to budget and avoid debt this holiday shopping season
Did you mess up your budget? Here’s how to get back on the right track
With a budget, you basically keep track of how much money you put in and how much you spend. From there, you can see where you need to start making changes and how much you can save and invest.
Keeping track of your budget can also be a challenge. These six hacks can help you stay on track.
1. Seperate your bank accounts
Browning suggested that you have a separate checking account dedicated solely to paying your recurring monthly bills, such as rent or mortgage, electricity, gas, and cell phone bills.
Find out the total outstanding debt and set up a transfer to the account for that amount each time you pay. So if you pay twice a month, divide the number in half and make two transfers.
At the end of the month, use that money on your recurring bills. Browning likes to pay them with one credit card, then pay it off each month with that account. Since you’ll essentially empty the account every time you pay bills, use an account that doesn’t have a fee, he said.
Organize your debt based on debt type, interest rate, and maturity date, suggests certified financial planner Zanellia Harris, president of the Harris & Harris Wealth Management Group, based in the Washington metro area.
Then decide which debt you want to pay off first — about a quarter, six months, or a year — and do it. Then go to the next stage.
“This helps clear the clutter in your mind about what you’re doing and gives you the satisfaction of knowing you’re achieving a goal,” Harris said.
3. Press the pause button
Before you buy that item that caught your eye, stop. If you’re in a store, walk around and do the rest of your shopping. If you’re buying online, keep items in a basket for a day or two before hitting the buy button, Harris suggests.
“It will give you a chance to really think about whether or not this purchase is necessary,” she said.
4. Make adjustments
Portra | Digital Vision | Getty Images
Don’t just set your budget for the month and forget about it. Instead, think of it as a living, breathing document, Browning said.
Check it in periodically to make sure you’re on the right track, so if you’re not, you can adjust.
“You change the plan, but you make a plan that is more realistic and achievable by the end of the month,” he said.
5. Do some financial espionage
If you decide to make a purchase, dig in first. Get as much information as possible about the product, pricing, return policy, guarantees, and payment options, advises Harris.
She said you’ll likely find sales, specials, and payment terms that fit your budget.
6. Review your expenses annually