Let’s face it, budgeting doesn’t come easy to everyone.
In fact, a lot of us, myself included, spend much of our time clawing back from blowouts and bad spending binges all year round. Whether it’s clothes, eating out, or socialising with friends, I often struggle to say ‘no’ and sometimes will find almost any excuse to part with my hard-earned cash.
At some point, though, we all have to recognise that to stay afloat and keep doing the things we enjoy, we have to start moderating and following some sort of budget or risk losing our homes, cars and more.
We all save for different reasons, and it’s not always because we’re skint. Sometimes, we budget to go on holiday or to make a much-wanted purchase, like a car or games console. Whatever the reason, there are plenty of budgeting apps and easy budgeting tips that can improve our efforts and attitudes towards saving. Admittedly, these methods aren’t for everyone, but there are some tips we can all follow to save quickly and easily.
Here are four easy budgeting tips for creating a money-saving plan that sticks.
1. The 50-20-30 rule
The 50-20-30 rule was recently popularised by American politician Elizabeth Warren and proves an effective budgeting method having made its way from overseas. The rule requires us to divide our expenses into three categories: wants, needs, and savings.
The largest portion obviously goes towards the essentials, like basic utilities and keeping a roof over your head. The 20% is committed to savings and clearing any tedious debts. The things we want, typically eating out, on-demand subscriptions, and trips to other cities, fall under the 30% bracket, though this might seem surprising.
The key to successful budgeting isn’t just making a plan for saving and sticking to it. Staying motivated for budgeting won’t last if we don’t allow ourselves to continue doing what we enjoy, even in moderation.
That isn’t to say budgeting can’t be adapted, but this structure provides a good opportunity for both short and long-term saving and helps us to recognise the right areas for saving responsibly. While I can attest to the success of the 50-20-30 rule, it only works well when you’re monitoring every little expense.
2. Paying debt is an important part of successful budgeting
Paying off what we owe on credit cards and bank loans are surefire methods for taking back financial control. Debt will never go away. It will continue to get in the way of your budgeting plans, slowing down progress towards financial goals.
If paying debt was simple, we’d all be free of it and wouldn’t need to budget in the first place. Factoring debts into a budget is the most affordable and effective way of clearing them.
Being free from debt allows us to focus on the more wholesome things in life, like saving up to start a family or finally putting a foot on the property ladder.
Trust me (from experience) that ignoring debt typically leads to the worst outcome. The reality is that most debtors are prepared to establish a repayment plan that’s mutually beneficial. By facing debt head-on, you’re way more likely to be eligible for alternative and personalised repayment options, rather than suffering with debt in silence.
3. Keep an eye on every expense
It’s typically the small expenses that sting us. It could be the morning coffee on the way to work or the sandwich we get every day for lunch. These are usually the areas that we slowly bleed money and could easily save on with homemade alternatives. As my Nan always says, “Look after the pennies and the pounds will look after themselves.”
Let’s be honest, not buying that £2 coffee before work every morning saves a tenner a week. That’s at least £40 a month, and that’s money we could all do with leading up to payday. Replacing some expenses is easier than with others but even the most minor adjustments to frequent spending can have a huge impact on saving.
4. Budget accordingly
Drastic changes can’t always be made overnight. Even minor reductions to spending can have a significant impact on saving. But an on-the-spot decision to cut all outgoings almost entirely is unlikely to breed tangible results.
In order for a budget to be successful, we should make adjustments that are realistic and personalised to our circumstances. Our earnings, fixed costs, and levels of overspending are different, so a personalised strategy will always be the most effective.
Making achievable targets and not depriving ourselves of too many of the pleasures that money provides us makes it easier to stay motivated and create actual savings. A budget that’s in line with the things we enjoy is easier to stick to than a routine we hate.
This reminds me a lot like my experience with dieting…
Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.