When it comes to setting your personal budget, it’s easy to make big promises to yourself. You swear off dining out during the week, adjust how much you spend on weekends and avoid unruly spending on impulse purchases. Unfortunately, when the chips are really down, making a budget can seem daunting — especially when you start practicing ridiculous rules for money management. Chances are, you’re setting up unrealistic savings goals with even more unrealistic methods of reaching them.
As we’ve said before, calculating a monthly budget isn’t tough, it’s sticking to one that can be difficult. So, before you go cold turkey on your ATM card and start setting some financial goals for yourself, check out some common personal budget promises the are almost sure to get broken immediately.
In theory, doing this sounds like a great idea to stick to your personal budget. In reality, though, it’s kind of a big mess and the worst way to try and budget your money.
Personally, I don’t like carrying large sums of cash on me. On the rare occasion that I find myself with a healthy sum of presidents on hand, I lose track of all the nickel and dime stuff I’m frittering my money away on, and end up pulling out my debit card to cover bigger expenses like gas and groceries. If you’re not living a lifestyle that constantly requires cash for tips, parking or tolls, it’s best to have no more than $40 in cash on hand and track your debit spending through online banking.
Of course, when it comes to budgeting, everyone allows for entertainment. Whether it be a dinner out, a fancy coffee drink or an impulse decision to join your co-workers at a happy hour (that goes well past the time for drink specials), each time you say yes to someone, money tends to flow out of your account like water down a river. It might sound easy to give yourself a limit on fun money, but the money you’re planning on saving will likely find it’s way into that next expensive craft cocktail on a rooftop bar.
Limit your funds for fun, but make sure you transfer those projected savings to a different account before you hit the town, as this will help stick to that personal budget you’ve set for yourself that month.
The truth is, you won’t save that much, if any at all. Spending habits and personal finances become ingrained into our daily lives and, when you think everything is a necessity, it’s hard to figure out how to cut down in all areas of your life. Instead, it’s easier to convince yourself that it’s possible to go cold turkey on one thing you spend money on. This line of budgeting never works because there will be a time when something you, “can’t live without!” on your “do not buy” list. That’s why your personal budget has to be realistic.
Rather than cut out one thing, give yourself $50 a month to spend on something you’re trying to avoid splurging on. This could be a cute shirt, an extra drink at the bar, or a fancier meal out with friends. Not only will this help you prioritize your needs, wants and challenge your spending habits, but it will probably save you more money at the end of each month.
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