budgeting tips

How to Budget Your Money | 11 Budgeting Tips and Hacks 2022

Anastasia Money Leave a Comment

So you love shopping, buying gifts, eating out, renovating your home, and just splurging. There’s nothing wrong with that, right? Just as they say: “No one can tell you what you want to do with your money”. 

But when you have mouths to feed or a business to manage, then you may want to keep track of your spending and set a limit for yourself. This is where the art of budgeting comes in. Today I will share with you my best tips on how to budget your money.

 

Why Do You Need To Budget?

To put it simply, budgeting is a type of planning that allows you to track your spending habits. This is also a method where you will be able to see how much you spend and save each month. And here are the reasons why you need to start budgeting:

  • Extra money – If you are someone with a family to focus on, then having extra money for emergencies, family investments, and education will be the smartest thing to do. 
  • Debt-free – When you lose money, high chances are you will ask the bank for a loan or ask a friend for some money. But either way, you still need to have money to pay back the money you just borrowed. Do you see where I’m going here? And since budgeting will help you see the things that you need and don’t need to spend on, then your chances of losing money and going into debt are very low.
  • Stops overspending or hoarding – There’s really nothing wrong in treating yourself once in a while or buying things that you like. But if you start to notice that things are starting to pile up in your house and there’s no more space left for more important stuff, then the problem starts. Budgeting will help you practice self-discipline and self-control. It will also help you make room for the more important things in your life. 

Budget 101 Tips: Steps To Budget Your Money

11. Don’t use “bad” debt and profit from the “good” debt

What I mean by this is credit cards with high-interest rates. But if it’s possible in your situation and if it makes sense for your family situation, you can always use the “good” debt – we are talking about a mortgage with a low-interest rate. 

In this case, you’ll be paying this debt over a long period of time, maybe 20 or 30 years. And with a high inflation rate, which is currently at about 7% in the US, you are getting the full amount of money you need for the house now. In 20 or 30 years,  because of inflation, the same amount of dollars will be worth a lot less. Plus, as a result of inflation, the price of your house in 20 years will be probably twice higher. I can tell you even more shocking numbers. It can cost twice more money even in just 5 years from now. That’s what happened with our apartment. We bought it with a 40-year mortgage in 2018 for a fair price, and we invested about $20,000 USD in a renovation.

The apartment was spacious enough for our family of 3 but still, during the pandemic, as most of the people, we were spending way more time at home than we were used to. And we felt it would be really great to move into a house and have some outdoor space. The problem was everyone else also wanted to buy a house during the pandemic, so it was hard to find any good properties on the market and the prices also skyrocketed in just a matter of months.

We also were worried that it would be harder to sell our apartment for a good price because we assumed everyone preferred to buy houses. 

Well, we were wrong because not everyone can afford a mortgage for a house, so a lot of families were just looking for bigger apartments to have a spare bedroom and use it as a home office. 

Our apartment was sold on the first day of visits, we had two potential buyers so we chose the one who was able to close the deal faster. The biggest surprise was that even though we listed the apartment for double the price compared to what we paid for it just 4 years ago, it was still below the average market price. That’s why we managed to sell it in a day. 

I gave you all these details to show how sometimes a good debt can be really good and can actually make you a huge profit in a matter of a few years. 

10. Set automatic savings withdrawals

Set automatic savings withdrawals that will happen each month with the same amount. No matter how strong is your intention to save money, for most people, there is always something that comes up (like seasonal sales or a new iPhone model) that will tempt you to spend. If you set in your bank account automatic savings withdrawals to an account that you never touch and don’t even look at it, you avoid the temptation to spend that extra money on things that you don’t really need. 

9. Create a Separate Savings Account

Create a separate savings account and don’t use it for daily purchases. Even better, each time you deposit money in it, completely forget that you own that account. Treat that savings account as your personal piggy bank where you will have to use it only for emergencies. This will help you save money wisely. On a side note, with the high inflation rates we are facing now, and with interest rates close to 0 and even negative in some countries, keeping your money in traditional saving accounts in banks actually means losing money.

If you want to keep the money out of your sight and out of your reach while allowing it to grow over time, you might consider long-term investments in stock market or even in crypto currencies. You could also check BlockFi which pays you a 9% interest per year which is far more than you can get in any traditional bank in the US or in most of the European countries. 

8. Plan for Your Taxes – One of the Most Important Budgeting Tips for Small Business Owners

If you run a small business, as a new entrepreneur, you might not expect to get hit by a large tax bill at the end of the year. I am not sure how corporate taxes work in your country but chances are that you are not paying taxes as a business on a monthly basis. You are more likely to pay business taxes quarterly which makes it easier to keep track of your taxes. But if you pay yearly, you really need to keep in mind the taxes you’ll have to pay. Make sure your business expenses don’t eat up the money you should have kept to pay taxes. In some countries, it can be a very substantial amount, maybe about 20 or 30% of your annual revenue or even higher, but you definitely should check this with your accountant because corporate tax is different in every country. 

7. Negotiate!

If there’s even a slight opening for you to negotiate a price, take it. Negotiating a discount when you purchase something expensive will help you greatly. For example, if you move to a new house, you might need to buy many home electronics at the same time. You can totally negotiate for a discount and you’ll be surprised to find out that even large stores like BestBuy can often give you a very reasonable discount price. You just need to ask! 

6. Track Your Spending – How to Budget Your Money and Purchases

The best way to track your spending is to keep a record of it on your phone or list it down in a notebook or use an app, for example, Mint. It’s a good idea to keep track of your expenses and categorize it so you know where you can make changes. You’ll be able to see what you’re spending the most money on and where you’ll be able to save the most money.

A helpful tip to track your spending wisely is to make two separate lists: 

  • List of all your fixed expenses such as rent, mortgage, bills, utilities, and other fees that you can’t reduce much
  • List all your other expenses (groceries, leisure, shopping, etc) and other fees you can control and cut back on.

5. Set Specific Financial Goals

Why are you saving money? Why do you need to budget? Setting goals and reasons why you need to save money is a great way to keep you on track and disciplined when handling money. The clearer and more specific the goal is, the better so you won’t have any room for excuses. An example would be setting a specific amount of money saved for the week or month. I also suggest setting a spending limit which will be a great help for you in the long run.

4. Create A Grocery / Spending List

Another great way to help you with budgeting is by creating a grocery or spending list. This method will help you know which items you actually need more and which are not necessary. If you have items that you want to buy but are really not that needed, then you can always set it to your “To-buy” list or “wishlist” if you ever have extra money. 

Another smart way is to meal plan in advance. List what foods and ingredients you need, buy in bulk, meal prep in advance, and you won’t have to worry about your food for the next few days. And when you go to a grocery store, with a list of products that you need, you will have fewer distractions and temptations.

3. Use Cash and Keep Your Change

If you are on a budget, I recommend buying things in cash. Why? There are two benefits to this: one, psychologically when you give away your physical money, your brain processes it better and you feel more “the pain” of spending it. When you swipe up your credit card, the transaction happens virtually and you don’t see your wallet is getting thinner.  And two, you will be able to keep and save your change! 

I suggest getting a piggy bank or storage with a lock for your money. Give the key to your family member you trust and open it when it is already full. You will be surprised at how much you have saved and gained just by your changes and the extra money in your pocket.

2. Repurpose and Recycle

Here’s a little motto I have used in my everyday life: “If it still can be used, don’t throw it away”. As a DIY person myself, I save tons of money just by repurposing or recycling old furniture, clothing, and other materials instead of buying something new each time. This will not only save me money, but it will also help me contribute to the environment and boost my creativity. 

Doing some DIY projects like this is also a great activity to do with your kids and loved ones! 

1. Have Multiple Sources Of Income

If you think that saving money is not enough and you are looking for ways how to make money, then having multiple sources of income would be beneficial for you. Start looking for side hustles that will help you have passive income – which is money you can make even while sleeping! 

This could be a Youtube account, a blog, online course, digital eCommerce store, and more! You can also take on high-paying part-time or freelance jobs that I have talked about a lot on my blog or Youtube channel. 

I’ve covered on my channel all these different opportunities. Check out there videos on my channel if you want to learn more:

I hope that these suggestions on how to budget your money wisely will help you in the long run. And if you have more ideas or your own techniques in budgeting, then I would love to hear it in the comment section below 🙂 

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