If you’re struggling to stick to your budget, it might be because you’ve set unrealistic goals for yourself.
We all want to max out our retirement accounts and aggressively pay down our debt. But it’s important to create a budget that accurately reflects your financial means.
If you only make $30,000 per year, it would be prohibitively difficult to save $1,000 or more per month. Building your budget around that kind of objective would be setting yourself up for failure.
Here are some tips to help you keep budget goals realistic so you don’t burn out and give up.
5 Tips to Keep Your Budget Goals Realistic
Go Through Your Bank Statements
When you make a budget, it’s important to use numbers that are based on your current spending. Creating your budget without looking at your bank statements is a recipe for frustration. If you guess how much you spend every month, you won’t know if the savings targets you’re aiming for are realistic.
Get out your calculator and bank statements from the past few months. Add up your fixed monthly expenses like rent first—they’re the easiest to calculate because they don’t fluctuate.
Then figure out how much you spend on discretionary expenses like groceries, eating out, and travel. You can do this by adding up how much you spent on each category over the past three months. Then divide it by three to find the average.
Don’t forget to account for semi-annual expenses like car insurance and miscellaneous things that pop up, such as car repairs and maintenance. Then record all of these numbers in a spreadsheet so you can easily reference them.
Cut Your Expenses Gradually
If you haven’t crunched the numbers before and figured out how much you’re really spending, you might not like the results. There may not be much money left over at the end of the month to meet the financial goals you want to achieve, like buying a house.
Experts recommend that you save about 20% of your income every month, which is a good benchmark to keep your budget goals realistic. If you’re not hitting that number, you may want to trim your expenses so you can set some money aside instead of living paycheck to paycheck.
However, it’s important to start cutting back gradually. If you reduce your eating out budget by half, you might find it too difficult to stick to and give up.
Instead, challenge yourself to reduce your spending on restaurant meals by 10% every month until you reach your goal. That way you won’t go through lifestyle shock.
If you have multiple spending categories you need to reduce, focus on just one or two every month so you don’t get overwhelmed. And if you mess up and overspend, don’t beat yourself up. You can always borrow money from another category or save a little less, which isn’t the end of the world if it’s just for one month.
It’s going to be hard to change your lifestyle, but in the end, it will be worth it.
Include Fun Money in Your Budget
If you’re a natural saver, you may have the opposite problem—well over 20% of your income is going toward saving and investing every month. While this isn’t a bad thing, it’s important to set aside some fun money to enjoy your life and keep your budget goals realistic.
You can’t always say no to drinks with friends or pass up that new pair of shoes you have your eye on. Denying yourself everything you want and sticking to a spartan budget will eventually lead to frugal fatigue.
So make sure you account for discretionary spending. Experts say it’s ok to spend about 30% of your income on things like shoes, clothes, takeout, and subscriptions.
Revisit Your Budget Regularly
Your budget is a living, breathing document. As your income and circumstances change, it’s important to revisit your budget to make sure it’s still working for you.
I like to review my bank statements and budget spreadsheet once every three or four months. But you may need to adjust your budget more often during the first few months of following it.
It’s unlikely you’ll get your budget 100% right the first time, so take a look at it every month or so and reevaluate it. Use apps like these if needed.
|App||Fees and Minimum||Best for:|
|Personal Capital||Free||Monitoring wealth and spending|
|YNAB||$84 a year or $11.99 a month (after a 34-day free trial), free for students for 12 months.||Personal budgeting|
Reward Yourself for Sticking to Your Budget Goals
Sticking to a budget isn’t easy, especially if you’re used to living paycheck to paycheck. So when you nail it, make sure you have a reward planned to celebrate your financial progress.
Your reward doesn’t have to cost a lot of money—it could be something as simple as a cup of coffee at your favorite cafe. But do something to mark this achievement. Recognizing the hard work you’ve put in is key to avoiding budget burnout.
We all want to achieve our financial goals quickly, which can make it hard to set a realistic budget. But creating an aspirational budget that doesn’t reflect your current spending is setting yourself up for failure and frustration.
So make sure you base your budget off your bank statements and cut back your expenses gradually so you don’t get burned out.
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