9 Budgeting Hacks for 2021
- Author: Monica Jackson
- Posted: 2024-09-10
As economic uncertainty reigns, while COVID-19 continues to spread, you should be careful financially and stick to a budget. Budgeting can be difficult because many discretionary purchases are tough to eliminate, but with the right skills, anyone can stick to their financial goals. Here are nine important hacks to keep to your budget this year.
Make a Personalized Expenditure Plan
In order to stick to your pre-established budget, you should create a spending plan that you will not exceed. In principle, you should allot a purpose for every dollar that you make and use. When you have a purpose for spending your money, you should stick to it and not go over the limit. These purposes should include essentials such as groceries and bills, as well as some discretionary purchases such as coffee and activities.
Abide by Your Plan
After you work meticulously to compile your spending plan, it would be very counterproductive to breach it with extraneous spending. There are many ways to ensure you do not go over your budget plan. For example, if your household pays monthly subscriptions for many streaming services, you should consider trimming the fat of that kind of spending. Additionally, you should cut spending by refraining from going out to eat unnecessarily.
Lower the Costs of Your Home Essentials
Everyone needs to spend money on the most important things to maintain a household: food, transportation, rent/mortgage, and utilities. To cut your food spending, try shopping at a less expensive grocery store, buying generic products of the same quality as name brands. Utilities are not a fixed cost, so deliberately using less power and water will save you money every month. To get around, consider using public transportation instead of paying expensive gasoline and car maintenance bills. Your rent or mortgage are not directly under your control, but living in a smaller unit in a less expensive area will cut those costs.
Don't Take on New Debt
Credit card debt can be one of the most avoidable and financially crippling phenomena that you can go through. Credit card companies put you into a spiral by charging more and more in interest on unpaid debt, which just causes the amount you owe to grow uncontrollably. This dirty trick is how credit card companies make a lot of their profits. To avoid going into unnecessary credit card debt, you should only make purchases on your credit card that you are absolutely sure you will be able to pay back. You should treat your credit card like cash.
Build Up an Emergency Fund
When the COVID-19 pandemic began and the economy collapsed, many people had to dig into their emergency funds to cover everyday expenses because they had lost their employment. Even when the economy is not in recession, the danger of a job loss still persists. If you lose your job or have any other financial emergency, an emergency fund will help you cover your essential budget while you wait out the crisis. You should begin the emergency fund with $1,000 then add a certain percentage of each paycheck to that account.
Pay With Cash
Another good way to stick to your budget and avoid debt is to use cash on everyday purchases. This is especially important when making discretionary purchases. If you go out to buy a drink at your local coffee shop, you should pay in cash because you will physically see what you have spent. Over the long term, you will have a better idea of what you regularly spend because you can see the money that you hand over. Moreover, you cannot go into debt by making cash purchases, so you should prefer using bills instead of plastic.
Hit Debt Head-On
If you do unfortunately have debt, the best way to pay it off within your budget is to set aside money in the short term to knock it out. In this situation, you need to cut some spending and reallocate that fiscal room to paying off debt. As debt accumulates, interest rates only rise, so paying it off in the short term will allow you freedom in the long term.
Don't Be Tempted
Companies make their advertisements of supposed discounts very attractive and tempting. However, you still spend money when you partake in them. If you want to better stick to your budget, you should avoid being exposed to these marketing tactics in the first place. If you think you will make an unnecessary purchase, you should avoid that setting before you have the opportunity.
