How to Budget More Effectively

The cost of living has gone up significantly in recent years, leaving many families struggling to make ends meet. With wages stagnant and food prices higher, every dollar needs to count for your family’s well-being. However, it’s also important to consider how to live a happy and well-balanced life on a budget, especially to keep your little ones happy. In this article, we’ll explore the most practical ways to get more out of your budget without sacrificing joy.

Bring Your Minimalist Mindset

Minimalism is about doing more with less, but more than that, it is a mindset that says you don’t need much to be happy. If you embrace this attitude when budgeting, you’ll also identify unnecessary spending that may feel good at first, but is leading to long-term damage for your and your future goals.

Keep a Spending Diary

People on a diet often don’t realize how much they are eating because they mindlessly munch throughout the day, which leads to excess pounds. When putting your wallet on a diet, you need to bring that same awareness to your spending.

As such, consider keeping a spending diary for at least four weeks. Every time you spend money, note down when, where, what, and how much. Print out all of your transactions from your different accounts and put together a timeline to see how much you are spending on different categories, like food, housing, utilities, clothing, and entertainment.

Review Your Subscriptions

Subscriptions are sneaky: they are easy to sign up for and easy to forget, but they can drain hundreds of dollars out of your bank account without you noticing. While the Consumer Finance Protection Bureau has been fighting hard to make it easier to unsubscribe, many companies are still force people to jump through multiple hoops to cancel their costly subscriptions.

With all of your transactions available to you, identify the different subscriptions and determine which ones are the most valuable. Many people are signed up for multiple streaming services but don’t really have that much time to use them, leading to hundreds of wasted dollars a year. Consider which apps have your favorite shows and whether you could find them more cheaply, such as by renting them from the library or waiting until they come out on disc.

Shop Around for Better Interest Rates

For most people, housing is their biggest expense, meaning that a high interest mortgage rate can significantly impact their budget. Thankfully, you may be eligible for a lower interest rate if you choose to refinance.

Whether a refinance is in your interest depends on where you live. For example, those seeking a Phoenix refinance are in luck: Arizona’s mortgage rates are about 5 basis points lower than the national average and are expected to continue dropping. This may be the perfect time to meet with a loan officer and discuss your options.

Mortgages are not the only places where you may be getting eaten up by interest. Look at your credit cards and compare the different interest rates to see if you can transfer balances from a high-interest card to one with lower interest. Debt consolidation can also be a good option if you have multiple high-interest loans that you’re struggling to pay off.

Don’t Dismiss the Mental Health Impact of Budgeting

Because money is such an important aspect of the modern world, it also affects our self-esteem and psychology. We may make illogical financial decisions not because we don’t know better but because they benefit us psychologically.

Bernadette Joy, a financial counselor, suggests journaling about financial issues to uncover why you might be making money mistakes and what they could mean for your overall well-being. By identifying why you do certain things, you can develop a healthier relationship with money.

Be Intentional With Your Goals

Goal setting is a powerful way to stay motivated. The best goals are measurable and achievable, with built-in tests to ensure that you stay on track. You should develop your goals and then keep them visible throughout the year, ensuring that you have something to work toward and a reason to keep moving.

For example, you may want to have a certain amount of money in your 401k by the end of the year. Pairing this intention with a reminder of why you want to do this, such as a picture of a happy couple in retirement, will motivate you to forego little pleasures, like that extra shot of espresso at Starbucks, to achieve your goal.

Stay Positive With Budgeting

While many people dread budgeting, it can actually be a way to live with more intention and do more with what you have. Instead of viewing it as a punishment for excess, see budgeting as a type of healthy diet for your finances, making sure that every dollar counts and is used to maximize your happiness. Be intentional with your spending, review your accounts, and find ways to cut costs without sacrificing the important things. Above all, set achievable goals and celebrate when you succeed.