Whether you’re between jobs, facing unexpected new expenses or just trying to stay on top of your finances, there are plenty of good reasons to review – and refine – your budget.
Adjusting to a leaner lifestyle isn’t always easy. Maybe you’ve pledged to fix your finances before but struggled to stick to your plan. Or maybe it’s your first time fine-tuning a budget and you’re not sure how to get started. But while it may take a little extra work, trimming down your expenses is possible – and it will pay off in the form of greater financial security down the road.
Follow these five steps to streamline your budget and give it staying power:
- Get your bearings. Before you set your sights on the finish line, make sure you know where you’re starting. What are your regular spending habits? What expenses or debt does your household manage? How much do you save and invest, and what are your saving goals?
Using a mobile banking app, online checking history or old-fashioned paper bank statements, go through the last month or two of your finances and use that as the basis for your budget. Separate your essential expenses – like rent, utilities, gas, and groceries – from nonessentials like entertainment and dining.
- Reset your resolutions. With 2021 half over, it’s a good time to reset any New Year’s resolutions. Nearly one third of Americans pledge to save more and spend less, but only a tiny fraction follow through on that resolution. The reason is simple: Most people begin budgeting with ambitious goals and plenty of motivation, only to backslide on their progress when that motivation wanes.
Setting realistic, achievable goals is key, according to psychologists. Try implementing one small change every few weeks – whether that’s checking in with your budget, sticking to a spending limit or setting aside a certain amount of money for savings. Once you get used to one habit, consider adding more.
- Follow the path of least resistance. Look for ways to make long-term changes that don’t require much willpower. Can you cancel a recurring subscription service you don’t use? Automatically transfer a portion of every paycheck to savings? Buy generic items instead of brand name? Whittling down your expenses one by one can add up to significant savings over time.
- Get the most out of every dollar. Although it’s a good idea to monitor how much you spend on “wants” versus “needs,” you don’t have to give up discretionary spending entirely. Instead, focus on getting the most bang for your buck.
Impulse decisions can be some of the biggest budget-wreckers, especially when you’re adapting to stricter spending limits. Always do your research and compare prices before you buy. If you’re headed to the store, consider making a shopping list and carrying it with you as you shop to avoid picking up things you don’t need.
For pricier purchases, follow the 24-hour rule: Think it over for a full day, and if it still seems like a good idea, go for it. You may find a cheaper option in that time – or decide you don’t need it at all.
- Lather, rinse, repeat. Trimming your budget isn’t a one-time process. Down the road, you may discover that you’ve accrued new expenses, that your saving goals have shifted, or that you’re earning more or less than you did before. Check in with your finances at least once a month to make sure you’re on the right track – and once a year, take a comprehensive look at your budget and update it to match your lifestyle.
At Axiom Bank, we build financial solutions that put you in the driver’s seat of your financial future. From seamless online and mobile banking to stellar service at bank branches, we’re committed to helping our customers achieve their goals every step of the way.
Axiom Bank, N.A., a nationally chartered community bank headquartered in Central Florida, provides retail banking services, including checking, savings, money market and CD accounts, as well as commercial banking, treasury management services and commercial loans for both real estate and business purposes.