Budgeting Tips You Might Not Have Considered

If you’re like most people over the age of 25, you’ve probably tried your hand at creating a personal or household budget using some popular budgeting guidelines such as the zero-based budget and the 50/30/20 rule. If so, you probably have some idea of where you stand, where you’re headed, and, most importantly, what you might do to further improve your short- and long-term financial situation. Which is great. Now, take the next step – a deeper dive into personal and household budgeting. By doing this, you’ll be able to firm up your numbers, fine-tune your budget, and improve your results. To begin, take a minute to discover:

• How to establish short- and long-term savings goals

• Time-tested budgeting tips that you may not be aware of

• When and how to adjust your spending

• Which online budgeting apps can help you track spending

• Why you should review your budget plan regularly

Learn the SMART way to set your savings goals

The first step to refining a personal or household budget is to make sure that you have a clear, detailed vision of your short- and long-term goals. Knowing what you hope to achieve - and when - will help you to determine how much savings you will need moving forward and how much you should be setting aside each month. This, in turn, will inform many of your other budgeting decisions, including how much discretionary spending you can afford on a regular basis.

Many financial professionals suggest using the SMART formula to set short- and long-term goals. If you adhere to this guideline, you will set Specific, Measurable, Achievable, Relevant, and Time-bound goals.

First, be specific about what you want to achieve and when. Set goals such as "paying off $1,000 of credit card debt within three months," “investing $10,000 each year for retirement,” or “saving a $50,000 home down payment in five years.” Make sure that your goals are achievable based on your current financial situation, relevant to your overall life plan and aspirations, and easily measurable. Finally, set a specific time frame for achieving each goal. By applying the SMART formula, you'll not only create a clear financial roadmap and increase your chances of meeting your goals, but you'll also have a solid foundation on which to build a budget that will work today and tomorrow.

Keep these budgeting tips handy

You may already be familiar with some commonly used budgeting tips, such as the 50/30/20 rule or the five top tips for budgeting. If not, see our FAQs below. If you are, take a minute to discover some others that are favored by many financial professionals and can take your budgeting to the next level.

Use online budgeting apps to track your spending

While some people still prefer pen and paper or traditional spreadsheets, others are finding that online budgeting apps are indispensable for tracking spending and other aspects of the budgeting process. These apps offer a user-friendly and convenient way to monitor expenses and gain valuable insights into personal and household money management.

Categorize your expenses

Once you have a comprehensive record of your expenses, break them down into three categories: fixed expenses, variable expenses, and discretionary expenses.

Fixed expenses include essential expenditures that don’t vary from month to month - items such as rent or mortgage, utilities, cable TV and internet, car payments, and minimum debt repayments.

Variable expenses include essential items such as groceries, out-of-pocket health care costs, childcare expenses, and gasoline, which can vary from month to month and should be averaged out to arrive at a monthly estimate.

Discretionary expenses include non-essential items, including dining out, entertainment, vacations, gifts, hobbies, and personal "luxuries" such as manicures and premium cable networks.

By splitting your expenses into these three categories, you’ll have a clear picture of how much you have to spend each month and, importantly, where you might be able to trim costs if there is a shortfall between your cash flow and your total expenses.

Factor in an emergency fund for unexpected expenses

In addition to your regular expenses, there is always the possibility that less predictable costs will arise. These might include car repairs, home maintenance, higher-than-normal health care costs, or emergency travel. These types of expenses can be covered by an emergency fund, which you can build gradually by setting aside a small amount of money each month. Be sure to factor in this outlay when calculating your budget.

Find new ways to save money

With the current trends toward higher prices and rising interest rates, more people are likely to face monthly budget shortfalls than monthly budget surpluses. So, it follows that finding ways to start saving money has become an increasingly important aspect of the budgeting process. Here are some tips to help you save money and, hopefully, free up funds for savings and investment.

Use autopay for fixed expenses

By choosing the automatic payment option for your fixed expenses, you’ll save money on an ongoing basis. With autopay, you’ll avoid late fees, which are increasingly costly and can add up very quickly. Autopay also eliminates the need for postage stamps and checks, which can lead to modest cost savings over time, especially if you have several regular bills to pay each month. In addition, autopay can help prevent missed payments that can affect your credit score. When using autopay, be sure to monitor your bank or credit card statements regularly to ensure that there are no discrepancies or unauthorized charges.

Think before you spend

When considering a discretionary purchase – be it a larger flat-screen TV for the family room or a ticket to your favorite band’s third farewell tour – take a deep breath before you click on “Complete Order.” Consider whether you need the item and, more importantly, whether you can afford it. Make a wish list and live with it for a few weeks, then make your purchase decisions. Discretionary purchases which seem "minor" at the time can add up quickly and, when they do, can derail even the most carefully developed budget plan.

Use money-saving apps

Coupon and cashback apps offer a convenient and efficient method to access discounts, deals, and cashback rewards on various products and services. There are several popular apps that let users unlock cashback offers on groceries, apparel, and other essentials. Other apps provide cashback on online purchases made through their platform. Many of these apps also offer a browser extension that automatically applies coupon codes at checkout, ensuring that users never miss out on potential savings. These apps can help you to stretch your budget while enjoying some of your favorite products.

Pay your credit card bill on time and in full

With rising interest rates the order of the day, carrying a high credit card balance can be an expensive proposition that can quickly drain funds from other areas, including savings and investments. In addition, late payments result in costly fees and penalties that add up over time. And remember, high balances and late payments can also affect your credit score, which is crucial in securing loans, mortgages and other forms of credit. While it’s not always easy to do, paying credit card bills on time and in full is key to sound budgeting and financial management, offering both short-term benefits and long-term stability.

Reduce food costs

Be it your morning coffee five days a week or your holiday dinner three times a year, you don’t have to do the math to know that cooking and eating at home offers significant savings when compared to dining or taking out. Especially at a time when menu prices, service charges and tips seem to be rising on a daily basis. Cooking at home allows you to buy in bulk and take advantage of discounts and special offers at supermarkets or big box stores such as Costco and Walmart. In addition, home-cooked meals often yield leftovers that can be repurposed into new dishes and more meals. Overall, the financial benefits of cooking and eating at home make it a “no brainer” for those who are looking to save money every day.

Review and revise your budget

Reviewing and revising your personal or household budget on a regular basis is crucial for maintaining financial stability and achieving long-term goals.

• Regular budget reviews can help you to understand where your money is going and identify areas where you might be overspending. By keeping track of expenses, you can make informed decisions on where to cut back and prioritize essential needs.

• Events like a new job, a pay raise, a major expense, or a change in family size will affect your financial situation and require you to adjust your budget to ensure that it aligns with your current circumstances

• Budget reviews can help you spot cash flow issues early on and help prevent you from falling into debt.

Whether you’re saving for vacation or planning for retirement, reviewing your budget regularly lets you assess your progress and make necessary adjustments that can help you to reach your goals on time.

• Small expenses can add up over time and drain your finances without you realizing it. Regular budget reviews allow you to identify these money leaks and make small changes that can lead to significant savings in the long run.

• Reviewing and revising your budget promotes financial discipline and responsibility. It will help you to be more conscious of your spending habits and lead to well-informed and productive financial decisions.

Guardian can help you reach your financial goals

Creating a personal or household budget plan is one of the first steps in your financial journey. If you need guidance moving forward – on issues such as retirement strategies or using life insurance to protect your family’s future - Guardian can help. To find a Guardian financial professional near you, just fill in your zip code and click below.