Since creating your budget, are you seeing an increase in your monthly savings? If you are, that’s great! That means you’ve stopped spending more than you earn and falling deeper into debt. Now that your account balances are healthier, don’t be tempted to pull back on saving and revert to your old spending habits. Keep up the good work managing your spending and saving money. Your wallet will thank you.
Stick to Your Plan
First thing’s first—you’ve already created your budget, but what are you doing to make sure it sticks? You should be regularly reviewing how your actual spending and saving is tracking against your budget. If you aren’t looking at your budget and spending throughout the month, how will you know when to hit the brakes on new purchases? Be especially mindful anytime you make a purchase that wasn’t planned. Is there room in your budget for it?
It’s also important to revisit the budget you set and adjust as needed. Maybe your rent, gas prices, or health insurance costs went up. You need to adjust your budget to account for the expense change, and increasing spending in one category means you either need to bring in more money or decrease spending somewhere else. Be sure to refer back to your budget often to ensure that you’re staying on the right track. After all, budgeting is the key to achieving financial success.
Finally, you want to do your best to avoid taking on new debt. You’ve already come so far; new debt is just a setback for your progress and hard work.
Don’t Give in to Impulse Buying
Have you ever walked into a store and seen something you just had to have? Making purchases in the spur of the moment based on emotions often leads to regret. Impulse buying can get pretty dangerous pretty quickly.
Identify wants versus needs. Use the 24-hour rule for all of your purchases that are outside what you’ve budgeted for the month (Everyday purchases like gas and groceries wouldn’t apply in this case). Do you actually need that item or is it just something you really want? Will it cause you to go over your budget? Think it over and be honest with yourself. You’ll be surprised how often the appeal wears off with a little distance.
Another trick to avoiding impulse buys is thinking about the work it took to earn your money. Picture this: let’s say you make $25 an hour and the eye-catching item calling your name is $300. Is it really worth twelve hours of work? Thinking about that expense in a new light might just curb your desire to make an impulsive purchase.
Start Chipping Away at Bad Debt
Not all debt is bad. Debts like the mortgage on your home and loan for your vehicle are both considered good debt. Not only is it normal to take out loans to make these kinds of big-ticket purchases, but it’s expected. Home and vehicle loans are tied to something you own; they hold value.
It’s the other types of debt that are a hard on your budget and aren’t giving you anything in return. Revolving credit card debt is the type of debt that gets the most people into financial trouble, with the average household carrying a balance of $15,654. Student loans and past due medical bills are also examples of bad debt, and aren’t doing you any favors.
Whenever you revisit your budget, adjust your plan so that you are paying more than the minimum payment on these types of loans. This strategy helps you pay down the overall amount owed more quickly and saves on interest. No matter how much extra money you put toward your bills, it’ll make a difference in the long run.
Let GOLD help
We’re always here to lend a helping hand on your path to financial success, whatever that looks like to you. A critical piece of budgeting is saving. Make saving simpler with a different club savings account for each of your savings goals. GOLD Club Accounts are dedicated savings accounts created to help you reach your financial goals faster.
Want to chip away at debt even faster? Transfer your high-interest credit card balance or pay off a loan with the GOLD Credit Card or a GOLD Personal Loan. A better rate and shorter term can save you money and get rid of debt faster.
Questions? Give us a call at 484-223-4200.
About Stephanie Groller
Stephanie is the Branch Experience Leader at GOLD. She supports and directs Member-facing branch staff, empowering our team to provide all Members with a five-star experience. She strives to inspire and motivate Members and staff alike to achieve their aspirations. Playing a part in the success and growth of GOLD and our Members is what Stephanie considers the ultimate reward.
Budgeting - October 28, 2019
Budgeting 101: The Foundation of Financial Freedom
Creating and sticking to a budget is the foundational step to achieving personal financial freedom. We'll show you how to create a solid budget on the blog.