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Starting the new year on the right foot is always the desirable choice.  Because this site is dedicated to helping young professionals find financial independence and live their best life, I feel like the topic of creating a personal budget is important.

This month will focus on two primary topics with posts: creating a personal budget and preparing for tax filing season.  To date, I haven’t focused on budgeting because I first felt the need to enlist some budgeting experts to weigh in with their advice rather than have me offer personal budget plan tips.

January will feature three personal budget guest posts and all of them are great.  I’m very appreciative of these kind folks offering their time to submit guest posts to this site for such an important topic.

Going forward, I plan to write more on this topic and provide some of my personal finance ideas on how to manage your money wisely.

Having a personal budget is so important because if you’re looking to improve your personal finances, you need to know where to focus.  And to do that, you need to know where your money is coming from and where it is going.

By identifying your income sources and major expense categories, you can establish an understanding of your financial picture and how you can take steps to control your money choices through a personal budget.

With that introduction, I’ll introduce this month’s first guest post on creating a personal budget.  The post comes from Grace Taylor at Readies.  This is a sponsored post from a company which is the largest completely independent loans review website.

The company believes it is important to provide guidance for consumers facing a complex array of borrowing choices and recognize the importance of creating and sticking to a personal budget to manage your debt.  I am grateful to have been contacted by Readies to provide this well-written post on sticking rigidly to your personal budget.

If you’re hoping to gain more control over your financial strategy this year, then one of the best things you can do is start by building an effective personal budget. A personal budget can often be the key to financial freedom.

However, while many of us know money is not the most important thing in life, it is necessary to keep track of our spending.  Actually finding and sticking to an effective personal budget can be a lot more difficult than it seems.

The good news is that while money management is tricky for anyone, there are things you can do to improve your chances of success. Here are some of our best tips for sticking to your personal budget and making your money work for you.

1. Choose Your Personal Budget Finance Goals

Sometimes, simply knowing that you should be saving money isn’t enough to convince you to change your ways. When there’s something in your life that you’re really tempted to buy, it’s hard to tell yourself that you can’t have it just because you set some arbitrary rules for your spending habits. However, if you can see a goal ahead, then you’re much more likely to remain motivated.

Think about what you want to accomplish with the money that you’re going to save by budgeting. Maybe you can afford to go on a great family holiday or buy that new kitchen you’ve been dreaming about.  Or maybe you need to save money and buy the best engagement ring.

Related: This is the Millennial Retirement We Deserve

2. Control Your Money by Focusing on Living Within your Means

Becoming more successful with your budgeting habits doesn’t have to mean saving half of your cash at the end of each month towards your end goals. Instead, you can simply start by trying to live within your means. Look at your expenses and find out whether they’re aligned with the amount of money you make.

If you’re spending more than you earn, then that’s a sure sign that something has to give. The only ways to fix living outside of your means it to either reduce the amount you’re spending or increase the amount you earn.

Related: How to Make a Lot of Money and Fail Financially

3. Look for Simple Solutions to your Financial Problems

Sometimes, people struggle with budgeting because they think that saving cash is just too hard. However, there are plenty of ways that you can reduce your spending without draining all the fun out of your life. For instance, maybe you could get a part-time freelancing job to give yourself an extra source of income.

It’s also a good idea to make sure that you’re spending as little as possible on your monthly expenses. For example, before you get a loan, check all the loan providers you can find to seek out the best interest rates possible.

Related: How to Make Smarter Decisions and Achieve Better Results

4. Save Money in Your Personal Budget by Getting Some Help from the Latest Tech

Plenty of people have trouble sticking to their personal budget. If you’re one of those people, then it only makes sense to get as much help as you can. That doesn’t just mean asking your loved ones for emotional support and guidance. These days, you can also get assistance from your smartphone in the form of budgeting applications.

Budgeting apps can track your spending habits for you, and help you get an insight into where you’re spending most of your spare cash. When you can see where your money is going each month, you’ll find that it’s much easier to change the way you spend. There are even some apps that can make useful suggestions on how to adjust your expenses.

Related: 10 Simple Steps for Creating a Budget in Excel

5. Be Realistic with Your Personal Budget

Another reason why people struggle with budgeting is that they don’t know how to be realistic with their goals. Although it might seem like a good idea to tell yourself that you’re going to stop spending money on eating out, if you currently eat out three times a week, it’s unlikely that you’ll be able to make such a drastic change so quickly.

Rather than pushing yourself to accomplish too much too fast, start by making small alterations to your spending habits. If you currently go to the movies twice a month for instance, try going just once instead.

Related: 5 Simple Ways to Pay Off Your Mortgage Faster

6. Stick to Cash

Finally, while some technology, like the budgeting apps mentioned above, can help with your financial strategy, some make it more difficult to reach your goals. For instance, it’s very easy to overspend when you’re carrying around a contactless credit card that allows you to buy anything at a single swipe.

With that in mind, make sure that you’re managing your spending actively by carrying and using only the exact amount of cash you know you need. When you’re counting every penny, you’ll be less likely to lose track of your cash.

Related: Should You Pay Off Your Mortgage Early?

Thank you for reading this quality post on creating a personal budget.  There are many ways to save money and manage it wisely.  Some of the tips above can guide us in making better money decisions.

Readers: What tips do you have for sticking to your personal budget?  What ideas can you share for making your money work for you?  Please share your insights in the comments sections below and subscribe to the newsletter if you feel this post provided you value.

how to stick rigidly to a personal budget

About the Author and Blog

I charted a very different course from the one I originally embarked on and feel I have landed in a more appealing destination as a result.  In the process, I’ve become a senior financial analyst at a Fortune 500 company, earned my CPA, and aspire to help young professionals navigate the sometimes-murky financial waters.  In my spare time hopping between a condo and apartment with my wife, I follow finance industry trends, practice a ketogenic lifestyle, enjoy travel hacking with advice from the Reddit Churning community, and train for endurance events.

Young and the Invested is meant to be an online community dedicated to finding financial independence.  I strive to build this online community by examining financial issues of interest to younger professionals.

Disclaimer

I have been compensated by the guest writer of this post at the time of this writing.  As a note, I am quite selective with which companies I allow advertising and sponsored posts on my site.  I do not make decisions about who can write on my site based on bottom line dollar amounts, but on quality of content and the message delivered.

Although I may or may not use some of their services, after due diligence and great interactions, I feel comfortable that these sponsors are indeed a good and quality sponsor and really look out for their client’s best interests.  If you do not feel this to be the case, please contact me with your concerns.

Some posts may contain affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.  Any recommendations made by me are my own.  Should you choose to act on them, please see my disclaimer.

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Join the discussion 11 Comments

  • Susie Q says:

    These are great suggestions! I really like your sixth point about spending cash. So few people use cash these days and I think it is one of the best ways to control spending.

    • Young and the Invested says:

      Spending what you have can be a powerful deterrent for spending against your future income (credit). I really liked that tip as well. Personally, we spend as much as possible on our credit cards but have the discipline to pay them off completely within 24-48 hours of spending money. We don’t like carrying a balance at all but do enjoy the cash back/rewards points we get from using them.

  • Susie Q says:

    That sounds like it would work well, too. A quick tip I learned recently – You want to have a positive balance on your credit cards on the last day of each calendar month. As long as you pay off that balance before the due date, it will help your credit score.

    • Young and the Invested says:

      That’s a tip I’ll need to look into because I’m always wanting to increase my credit score. I need to do more research on credit scoring all around beyond timely payments, credit history, and diversity of available credit lines.

  • GenX FIRE says:

    The hardest one for me was learning to live within my means after I started earning real money. Real money for me was earning more than what I earned as a LT in the USAF; $22k a year. My first job as a civilian paid me about double that, and that was a lot of money. Granted I also moved from middle America to NYC, so really I probably had less money than I had before. Anyway, I felt rich, and I spent money like water. It took me a few years to get myself back under control. Of course, I had a blast while doing it, and those memories are valuable to me now 20 years later.

    For number 1, I think I have to add that one should regularly re-update them. It’s hard for many people, my wife for one, to think about this stuff in a serious way. I was like that for those wild years as well.

    I think number 6 is a big one. Cash feels like a thing. Buying with a credit card does not feel like I am trading a thing, money. I use cash in my pocket to help me stop spending money. For me, anyway, it helps.

    Great Post!

    • Young and the Invested says:

      When I first finished graduate school and started my first job, I splurged on a whole new wardrobe. I did this partly because I finally slimmed down to the size I’d always wanted to be while in graduate school and nothing I owned fit me anymore. The first year of work was non-stop shopping sales to fill out my closet.

      Unfortunately, about 25-30% of those clothes were only worn a handful of times and still occupy space in my closet. I rarely wear some of these pieces of clothing and try to make it a point to do so despite not really enjoying the clothes. If I could do it again, I’d buy clothes at a slower pace and put more money in my retirement accounts. I’m happy to have reached my legal retirement account limit this year but I could have easily swung it a couple years back had I not purchased unnecessary clothes and made a few more sacrifices in my life. However, I do enjoy a lot of the choices I made for the memories I have today as well.

      I’m glad you don’t have any regrets on those memories all these years later. I feel the same about some of the trips I took, concerts I attended, and moments I had with friends.

      And for the cash element, there’s a tangible element which makes you appreciate spending the money more so than a balance on a screen. The cost of paying is all the more real when the cash leaves your wallet.

  • Xrayvsn says:

    Live within your means is a big one. Also preventing lifestyle inflation creep is another. When your income increases some people feel they no longer need a budget and go crazy with their new found riches, which at times can put them even worse off before the pay increase. Doctors are notorious for doing this

    • Young and the Invested says:

      I’ll admit to falling victim to lifestyle inflation my first 6-12 months of working. However, after slimming down to my more desirable weight in graduate school, none of my clothes fit anymore.

      As a result, I went on a buying binge when certain retailers announced sales. Most of the purchases were good decisions but about 25% is stuff I never wore more than a handful of times. I haven’t come to terms with the wasteful spending nearly 5 years later and it remains in my closet and I still attempt to wear it.

  • Young and the Invested – go ahead and sell the 25% of the clothing in your closet that you don’t like and add the money to your retirement account. It will feel a lot better than forcing yourself to wear clothing you don’t like.

    • Young and the Invested says:

      Now there’s an idea I can get behind. The clothes are actually nice, I just don’t have reasons to wear them. Thanks for sharing the idea- that’s great advice!

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