Too often, budgeting can seem like financial punishment — something that must be endured, like eating cold Ramen noodles at home while your friends are out enjoying wine night. But managing your money shouldn’t be about depriving yourself. It should free you to spend on the things you really want because you’re spending smarter.
Here’s how to manage your money without missing out on the fun stuff.
FIGURE OUT WHERE YOUR MONEY IS GOING
Before you can manage your money, you have to know what you’re doing with it. That means tracking your expenses. You may think you’re only spending $200 a month on dinners out. But are you really? You’d be surprised how quickly small expenses can add up. Budgeting apps can be your friend here, but old-fashioned spreadsheets work too. Make sure you’re looking at everything that’s coming in and going out.
PICK THE LOW-HANGING FRUIT
Once you’re finished tracking your spending, take a highlighter and tag any expenditure that didn’t bring you joy. The point here isn’t to judge how you’re spending your money; if grabbing a latte to and from work every day adds to your happiness, go for it (it is your money, after all). Instead, this is about reducing or eliminating items that don’t add to your life so you can get rid of them and free up money so you don’t have to worry about spending on wine night.
DON’T PAY FULL PRICE WHEN YOU DON’T HAVE TO
Nice things don’t always have to cost top-dollar, so negotiate everything. Threatening to switch your cable to satellite (or actually switching) can save you big. Negotiate big purchases like cars, furniture and even medical bills. You can also haggle over the interest rates you pay on your credit cards or adjustable-rate loans.
Taking control of your money can make life more fun.
Don’t pass up the right perks. Does that store where you always spend $200 offer a credit card that pays you cash back? Consider signing up. Many companies have loyalty programs for their best customers. Make sure you’re taking them up on it.
FIGURE OUT BIG GOALS
Ask yourself: What do you want your budget to help you accomplish? Is it to support your family? Get out of debt? Retire early? When you have meaningful goals, budgeting for the future stops being boring and becomes a tool that frees you to do what truly matters to you.
BALANCE SAVING FOR THE BIG GOALS WITH WHAT’S IMPORTANT TODAY
Once you know what you want to do in the future, you can find a balance to make sure you’re putting away something for those goals without depriving yourself today. This is where you may have to do some prioritizing. If it’s more important to you to take a vacation every year, maybe a future goal like retirement will have to wait a little longer. If it’s more important for you to retire at 50, perhaps you vacation closer to home.
Of course, life brings changes, which is why you’ll want to revisit your budget periodically. It’s OK to make changes along the way. The goal is to create a budget you can live with — one that helps ensure your money is working for you, rather than the other way around.