How to Budget Better
Budgeting is Hard...
Living within your means is a very difficult thing for a lot of Canadians to do. Life is expensive, it's hard to make money, and it's also pretty fun to spend money.
All of these things start to compound for a lot of people and they find themselves in a rut and potentially start falling into a deeper and deeper hole of debt.
So, what can you do to change this?
I recently read a study, which I believe will work for a lot of people, because I know it worked for me. I have definitely found myself spending more money than I should, which was way different than when I was younger and a really good saver, so what happened?
It had to do with how my mind works around money. Everyone will be different with this, but as soon as I got a job where I was only being paid once a month, I continuously found myself having trouble budgeting for the entire month. It was not a good time frame for me to work with and I found that I needed to think of money and budgeting in a much shorter window. For me, I can max out at thinking one-week at a time, but my best time-frame is thinking of money each day.
This time-frame will vary for everyone, but once you find yours, I believe it can work for you.
Let's say that I know that after I pay all of my bills, a good number for me to spend on a daily basis is $50 ($1,500/month).
Now I can easily track my days, because I know how much I spend every day on things like groceries, eating out, clothing, entertainment, gifts, etc.
Some days, I will no doubt spend more than my daily limit, but now I would know how much was left and to reduce my daily limit down if I spent too much one day.
However, what I found happened was that I wasted a lot less than I normally would, because I didn't want to have to reduce my limit because I bought something I didn't need. I also found that I would get excited if I could get through a day without spending anything, or barely anything on that particular day. I started to almost compete with myself and wanted to win by spending less and saving more. It changed my thinking around how I was spending money and made it really easy to keep within my means.
Money is always a mindset thing and savers save and spenders spend, so this is a good strategy for spenders to use to reduce their spending and start to understand where they are wasting money. It might completely change your bad money habits.
Give it a try and let me know if it works for you in the comments.