You may think of budgeting as a chore or something you only need to do occasionally. However, successful budgeting is not a chore when it means you have more money to use for the things you want!
Even if you are doing well financially there will still be ways you can improve your budgeting.
Regularly checking and amending your budget according to your needs means you can stay ahead of any unexpected financial problems in the future. Job losses, economic shocks, or ill health can happen to anyone at any time.
Make your budgeting and forecasting the best it can be now to help mitigate those potential shocks. Here are 6 ways to improve your budgeting & forecasting that anyone can do.
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Why Budgeting And Forecasting Is Important
Do you have any dreams for your future? Homeownership, being debt-free, or starting a family is some common goals for many people. Maybe you want to travel more or if you are older help younger family members with the cost of college.
Whatever your personal goals are the best way to achieve them is by budgeting.
Budgeting means you are accounting for every cent that is spent. Once bills and debts are paid, then you know how much you can add to savings or investments.
A key part of a good budget is forecasting your expected finances in the future. Combining all this data helps you see exactly what you need to save and for how long to achieve your goals.
It also means you know how much money you have that you can spend each month on the fun stuff. After all, you should enjoy some of your hard work now! The key is not to get carried away and overspend.
Always prioritize paying expenses, debts, and savings.
6 Ways To Improve Your Budgeting & Forecasting
The following 6 ways of improving your budgeting & forecasting are simple, straightforward ideas that everyone can put into action. You don’t have to spend hours a day doing complicated sums or invest in expensive software.
Simply spend a little time each week to review your budget including these suggestions and be on your way to a brighter financial future!
Free Budget Printables
The first thing you need to do is get organized! You could use a pen and scrap of paper to make your budget but there are many better options out there. The good news is that there are some excellent free budget printables you can get online to start your budget.
Don’t worry – you can print them off if you prefer having everything in paper form.
A free budget printable is exactly as it sounds. It is a free sheet you can print off that allows you to write down your budget.
Searching online reveals many sites offering these free budgeting tools. Some of them are extremely detailed providing multiple pages you can fill in. This could include expense trackers, savings plans, and debt repayment trackers.
Other printables are much simpler and are just one page giving you space to note your earnings and outgoings.
Have a good look around at all the options and use the one that best suits your needs.
If you haven’t properly budgeted before, then it may be easier to start with a simple budget. Once you are in the habit of budgeting, then upgrade to one of the more detailed budgeting printables.
Using these tools will definitely help you become better at budgeting.
Save As Much As You Can
Paying off debts should be your immediate priority. Especially if you have a lot of debts that are high-interest. However, even while you are paying off debts it’s still vital you save as much as you can.
One reason a budget can help with savings is you can see exactly how much is left after expenses are paid and can add some to your savings. Even a small amount at first is better than nothing.
Having some savings can be crucial when you need money for something unexpected. Emergencies can strike at any moment but if you have savings, then hopefully you can absorb any financial shocks.
Another benefit of having savings is that future budgets won’t be impacted by any emergency expenses. If you can still pay your usual expenses and use savings for emergencies this helps you not get into more debt.
Plus, it’s much better for your mental health knowing you can survive an emergency.
Emergency fund examples include things like unexpected car repairs, medical bills, or job loss.
Track All Spending
As part of your budget, there should be an amount specified for discretionary spending. A coffee on the way to work, a snack from the vending machine during the day, or getting the morning newspaper are all things you may pay for out of your discretionary spending fund.
Does that mean you shouldn’t pay attention to this? Perhaps you give yourself $75 a week that you can spend on anything you like. That’s fine and as long as you don’t spend over that your budget will be correct.
However, tracking exactly what you are spending every day could shed some interesting results on where your money goes.
On average you could pay $4 for a cup of coffee in the US. If you work 5 days a week, then you’ve spent $20 a week on coffee or $1040 a year!
By tracking your spending in this way, you can now decide whether spending over $1000 a year on coffee is worth it or not for you. If that money is better spent elsewhere, then make your coffee at home instead!
Follow this advice when reviewing your spending. If there is something you spend money on daily or weekly – is there a cheaper option? Could you read the news online for free? Make your own coffee at home or buy snacks when grocery shopping to take with you to work?
Doing these things means you have more money left over each month that you can either save, use towards debts, or spend on other things that are more important to you.
Remember To Include One-Off Expenses
Many budgets focus on day-to-day spending and monthly bills. Forgetting to budget for one-off expenses often means your budget can be ruined!
Insurances, home or vehicle maintenance, and school expenses if you have children are some examples of one-off annual expenses.
As part of your budget, you can include an amount to cover these future costs. You won’t know exactly what those expenses are going to be but if you look at how much you’ve paid in previous years you can predict the cost with a reasonable degree of accuracy.
To include these expenses first figure out your expected annual total. Next, divide that amount over 12 and add that to your monthly budget. By saving that amount every month you are ready for those bills when they arrive.
For example, you forecast that your one-off expenses will be $2000 over the year. Divided by 12 you need to put $167 aside every month in preparation for these expenses.
Please note, budgeting for one-off expenses is not the same as having an emergency fund. Your emergency fund is there to cover expenses that happen unexpectedly. One-off expenses are expected and can be budgeted accordingly.
Reduce Your Expenses
If you’ve created a detailed budget, you know exactly where all of your money is going each month. Use this information to make cuts wherever you can.
Many bills can be negotiated – energy, insurance, and cable could all see savings if you check with your providers.
Seeing how many subscriptions you pay for each month could also be revealing. Most of them cost a few dollars each which makes it easy to think they are cheap.
However, if you have 5 or 6 subscriptions that could be $50 or more a month! That’s $600 a year! Cut those subscriptions right down to save even more money.
Another large expense every month is the food bill. Save money here by eating out less and making your own lunches for work. When grocery shopping switch to cheaper brands as these often taste just as good but save you a small fortune!
By tracking your spending and cutting your expenses as much as you can, then you will have more money left over each month. That extra money can be used to pay off debts quicker and build up your emergency fund.
Keep On Top Of Your Budget
OK, you’ve created a budget, tracked your spending, cut your expenses, and know how much you can save. Time to put your feet up, right? Wrong!
Now that you’ve done all that awesome work don’t ruin it by not keeping on top of your budget.
Check it every week to make sure that every figure is accurate. If you are tracking your spending, you can make sure your receipts match up with how much you allocated for spending.
The benefit of checking your budget weekly is that you can identify problematic spending before it becomes a big problem! Life gets busy so it’s easy to miss you’ve suddenly started spending $100 a week more than you budgeted for.
By reviewing your budget, you can see where cuts need to be made, if you need to give yourself more spending money, or if you have more available to save than you thought!
6 Ways To Improve Your Budgeting & Forecasting Wrap Up
Ultimately the goal of budgeting & forecasting is to help you achieve your goals in life.
If you improve your budgeting now, then you can start working towards your goals with a clear financial plan. Use these 6 ideas to enhance your budgeting and enjoy financial freedom!