How to Stick to a Budget

Sticking to a budget can be difficult, for a variety of different reasons. For example, 69% of people say that increasing costs are the biggest challenge they face when trying to stick to a budget, according to a recent WalletHub survey, while many other people point to unexpected expenses or not having enough income. Fortunately, there are things you can do to make sticking to a budget easier, like setting realistic goals, automating savings and using a budgeting app.

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Below, we’ll run down some more budgeting tips that can help you stay on track.

Keep Your Budget Goals Realistic

Your financial goals are the reason why you decided to set up a budget in the first place, but having an unrealistic goal may be the reason your budget is doomed to fail. For example, saving 40% of your paycheck every month may sound like a great goal to have, but if your necessary living expenses take up 70% of your monthly income, it will be impossible for you to stick with your budget.

Instead, account for all your expenses and aim for a goal that allows you to save without overextending your budget. Having a more attainable goal should give you motivation to stick with the budget.

Account for Small Purchases and Irregular Expenses

You’ve probably listed your big expenses like your mortgage, loan payments and insurance, but what about your daily coffee run or gifts for your niece’s birthday? Small or one-off purchases may not be expensive, but not accounting for these small purchases can have a big impact on your budget and lead you to come up short.

You should have a miscellaneous category in your budget if these purchases can’t fit into other categories. Some items that can be listed in this category include:

• Gifts
• Holiday donations
• Coffee
• Snacks
• Child care during school breaks
• Health insurance copays
• Travel expenses
• Taxes

Learn more about budgeting categories.

Choose the Right Budgeting Strategy for You

Using a budgeting strategy can help you track expenses and manage your money more effectively. There are many popular strategies, and you should choose one based on your financial goals and the commitment level you want to put in.

50/30/20 Rule: Your after-tax income gets separated into three categories: 50% for needs, 30% for wants, and 20% for savings.

Envelope Budgeting: You categorize expenses in digital or physical envelopes and assign a specific amount of money to each envelope. Once money has been used up in a particular envelope, you can’t spend any more in that category for the month.

Zero-Based Budgeting: You subtract expenses one by one until you account for every dollar of your income. When you subtract your expenses from your income, it will always equal zero.

70/20/10 Rule: Your after-tax income gets separated into three categories: 70% for living expenses, 20% for savings and investments, and 10% for debt and donations.

Pay-Yourself-First Budgeting: You set money aside for savings every time you get paid before you pay any other expenses. There is not a set guideline on how much to save, so you can save as much or as little of your paycheck that you want.

Learn more about budgeting strategies.

Modernize Your Budget With a Budgeting App

Skip the old school way of creating a budget using spreadsheets or pen and paper. There are easier and more convenient tools to use like a budget app. Many budgeting apps, like the WalletHub app, let you sync your financial accounts so you can automatically track your expenses.

Budgeting apps also allow you to take your budget with you everywhere you go with easy access from your phone, so you can always keep track of your spending and reduce the likelihood of going over budget.

Learn more about the best budget apps to use.

Avoid Impulse Buys

Impulse buys are unplanned expenses you don’t need that can wreak havoc on your budget. It can lead to overspending, possible debt and the inability to save money for future financial goals.

Tips to Avoid Impulse Buys

• Give yourself a waiting period to determine if an unnecessary item is really worth getting.
• Have a list while grocery store shopping and stick to it.
• Avoid shopping while hungry or upset.
• Don’t store your credit card on any online shopping sites.

Automate Your Savings

Have your checking account automatically transfer money into your savings every time you get paid. When you automate your savings, it’s one less thing you’ll have to remember to do each month, and it helps you build an emergency fund for unexpected expenses that would otherwise make you go over your budget.

Automating your savings is particularly helpful when you follow the pay-yourself-first budget method, which prioritizes saving before paying your other expenses. There is not a set rule on the amount you should save, so you can save as little or as much as you want, as long as you are not overextending your budget.

Review Your Budget Weekly and Adjust as Needed

Monitor your budget to make sure you are meeting your money goals and not spending more than your income. If you tend to go over your budget every month, schedule time every week to review your budget to make sure you’re on track for the month. If you are going over your budget in some areas, look over your nonessential items and see where you can cut down on spending.

Have an Accountability Partner

Enlist a family member or friend to help you stick to your budget. This should be someone you trust who won’t be afraid to call you out about your spending habits. Schedule a check-in with them at least every month to go over your budget and track your progress toward your goals.

Reward Reaching Goals

Set up incentives that will motivate you to stick with your budget. This could be a purchase that you set aside a small amount of funds in your budget for. For example, if you stay within your budget for three months in a row, you could reward yourself with a nice dinner out or a relaxing massage. The incentive should be based off what you like, so it’s more likely you’ll stick to your budget.

Be Vocal About Your Budget

Speak openly with your friends and family about how much money you’re willing to spend on certain items and social events. This technique is called loud budgeting, and it doesn’t just make your financial boundaries clear to others, but it also makes it easier for you to hold yourself accountable and helps you keep your budget fresh in your mind, so you don’t go over budget.

Learn more about loud budgeting.

Resist Peer Pressure

Some people may try to convince you to exceed your budget to have some fun, even after you’ve said no. Even if they become pushy and you feel pressured, it’s important to stick to your financial goals and continue to say no.

Tips to resist peer pressure

• Be open and honest about your budget.
• Suggest budget-friendly alternatives.
• Prioritize your financial needs.
• Choose friends who are supportive of your goals

Use the Island Approach

Use different credit cards for different types of transactions. This is called the Island Approach since you are treating each type of transaction as if it were on its own island. For example, you could use one card for everyday expenses and pay the bill in full each month, and have a different card with 0% interest for a set period of time for large purchases.

You can even set up autopay for your budgeted amount on the everyday credit card. That way, if you see any interest charges, you’ll know you’re spending more than you budgeted for. You could also take things to the next level by having more than one everyday card, for different types of expenses.

Learn more about the Island Approach.

5 Reasons Why It’s Important to Stick to a Budget

Sticking to a budget prevents you from overspending, accumulating debt and damaging your credit. It can also help you build up an emergency fund for unexpected expenses and save money for long-term financial goals such as retirement or buying a house.

1. Prevents overspending. If you stick with your budget, you are less likely to make impulse purchases or overspend without realizing it. Not overspending allows you to have enough funds to cover your necessary expenses and save for the future.
2. Helps keep debt from piling up. When you don’t stay within your budget and you spend more than you earn, you may try to cover your expenses with credit cards and loans. But you will eventually have to pay back those credit cards and loans. If you don’t have enough funds to cover your current expenses along with the new debt, you may find yourself digging deeper into debt, leading to more financial distress. A budget allows you to set spending limits and plan out your expenses so you can identify areas where you can cut back on spending, if needed.
3. Good for your credit score. Too much debt has a negative impact on your credit score. Not making payments on your loans or credit cards because you don’t have enough funds will also negatively affect your credit. Sticking to your budget can make sure you have enough funds to cover your necessary expenses and helps you create a game plan for tackling existing debt so you can limit damage to your credit.
4. Assists you with building an emergency fund. Your budget should include allocating funds to an emergency fund, if you don’t already have one. An emergency fund will help you cover unexpected expenses, such as an expensive car or home repair bill, while allowing you to still have funds to take care of your necessary expenses. If you neglect your budget and don’t build an emergency fund, you may find yourself getting into debt to pay for the unexpected expense.
5. Helps you accomplish financial goals. It’s easy to have goals, but without a budget you may not have a plan to accomplish them. When you stick to your budget, you can save money for the future. That could be money you use to pay for your next vacation, put a down payment on a new house, fund your child’s college education, use in retirement, etc.