Did you know that only 41% of Americans have a budget? For those looking for a way to save money, save for retirement or find their way out of debt, budgeting is an essential tool.
Yet while budgeting is widespread, fewer households are putting it into practice. Almost 60% of people do not track their spending, while 40% have never even had a budget implemented in their financial lives, according to recent reports released by the Certified Planner Board Of Standards.
As a result, households that have implemented a budget are still facing a common problem: Adhering to it and the issue of saving money remains a problem for Americans. More families are finding it difficult to stick to their budget and not go over set limits. Yet this problem is easily solvable. With a bit of commitment and a few immediate fixes, your household can boost its chances of coming under budget by next month.
Get The Family on Board
One of the most common mistakes in every household is trying to stay under budget with mismatched spending habits. It is not uncommon to have a household or couple where one person can be termed a saver and strict with their budget, while the other is quite the opposite.
As a result, when their budgets are merged into one, it is much more difficult to stick to allocated amounts. Start with making it a family planning process and keep in mind the habits of everyone involved. It is important that some discretionary funds are built in to allow for treats. It also is a good idea to have a conversation with your partner or spouse and set spending limits, including a discretionary budget for each.
Implement A Recycle, Reuse And Retain Policy In The Kitchen
One of the top places households lose money is in the kitchen. Every year, American families lose $1,500 in wasted food by throwing it out. Therefore, if you are looking for ways to get your budget under control, the best place to start is in your family’s eating and food purchasing habits.
Simple changes such as meal planning and adding an accessible shopping list to be updated help your family keep track of the food you do have, and minimizes duplicate buying. It also helps you use up the food you do have before it ends up going bad.
Also, you can utilize the services of companies that offer regular boxed ingredients delivered to your home. They do the shopping for you and deliver the exact ingredients needed to make meals to your door, reducing the chance of waste. Another way to tackle food waste with your family in tow is to embrace, reuse and repurpose leftovers and scraps. Online cooking resources offer hundreds of recipes that help you turn leftovers into delicious meals, and it also is a great activity to do with young children.
Make Tracking Instantaneous For Everyone
Another key takeaway from recent surveys: A majority of households are not tracking their money in real time. Even families that do have a budget in place have to contend with a time lag between spending and the reconciliation with the overall household budget.
Removing this gives you a real-time picture of your financial health at any time in the month. As a bonus, it helps you make better decisions including impulse buys. Consider installing mobile-friendly budgeting, tracking and finance apps on both your and your partner’s phones. Many of them allow for syncing with your income, various spending habits and even with your partner’s spending as well. While you can easily access free or low-priced budgeting apps like these online and in your mobile download store, banks also offer their own budgeting and tracking tools attached to your checking account, which makes it easier to sync it all together.
Of course, you must also get into the habit of using these tools. Setting alerts, such as spending and minimum balance alerts (or a daily spending alerts), are good places to start.
Go Old School For A Month: Use Cash
A large part of the problem lies in maintaining discipline in our spending habits. If there is remaining money left in checking accounts or wallets, we are more tempted to spend it as we are often tricked or persuaded into thinking we can afford it.
However, this feeds into the common misconception that spenders often have: If you have remaining money, you can afford it. Extra income should not necessarily be regarded as free to spend.
It can be better used in a savings/retirement account. Another instance is having remaining income but only making the minimum payment on your credit cards. You may be keeping up with your debt payments but the extra income could significantly reduce the time taken to achieve financial independence, pay off interest and mitigate the impacts on your credit score.
Start with using a cash-based envelope system. Allocate a preset amount for each household category, such as grocery spending, bills and miscellaneous spending. Seeing your money dwindle as the month goes on will make you and other household members more aware of spending habits. Practice the concept of “if you don’t see it, you don’t have it.”
While having a budget accounts for a large progressive step toward financial independence for many households, it is sticking to it that defines the achievement of this goal. It also is the part that households find most challenging and seem to be lacking.
To get on your family’s budget back on track immediately, it requires you to do more than record receipts against your income. It requires ongoing change across the entire household — and these tips are a great start to get your spending on track.