Good budgeting is an important skill to develop whether in the context of your personal life, or in the context of any entrepreneurial project that you might be engaged in.
Businesses sometimes find themselves in unfortunate financial circumstances that necessitate them to — for example — look into things such as hard money loans. While these kinds of challenges will typically have a range of different potential causes underlying them, effective budgeting and good cost-benefit analysis can help to go a long way towards mitigating the issue.
In a more personal and day-to-day context, it’s hardly a secret that effective budgeting can make all the difference when it comes to ensuring that you live consistently within your means, that you are able to save up for big expenses that you’ve got your eye on, and more.
Good budgeting — as with so much else in life — largely comes down to developing and maintaining the right habits.
Here are just a few tips and guidelines to employ for more consistent budgeting.
Use a dynamic budgeting system that isn’t thrown off by unforeseen events
The budgeting system that you ultimately adopt can have a very large impact on your ability to budget effectively, and your ability to stick with your budget when faced by the various challenges and uncertainties that life naturally presents over time.
One area where many people get into trouble with regards to budgeting, is by setting themselves budgets that seem perfectly formulated, but which are totally static. Budgets that involve deciding what to do with future money that you haven’t yet made, but are “projecting.” Budgets that require everything to be in place, and that get instantly shattered by any significant unforeseen expense.
Using a dynamic budgeting system that is resilient, and that doesn’t get thrown off by unforeseen events in this way, can be a key factor in your overall ability to stick with your budget over time — and also to actually get real benefit out of it in the here and now.
Generally, budgeting systems that focus on only working with the money you have as it comes in, will be more robust. Likewise, budgeting systems that allow you to easily move assigned money between budgeting categories “on the fly” have a real advantage in this regard.
Finally, any budget should always involve setting aside a category for “unforeseen expenses.”
Utilise modern budgeting apps and tools that help to streamline and simplify the process
In the days when budgeting was something that had to be done on paper, it was a relatively complex and time-consuming skill, that few had any real patience for, and that many would opt to not get too involved in, in the first place.
Today, fortunately, a lot of the “behind the scenes” work of budgeting and managing your finances in general — from tallying up columns of numbers, writing out assorted notes, applying the right formulae, and so on — has been superseded by modern budgeting apps and tools.
A big part of getting in the habit of effective budgeting is likely to involve using tools that you find manageable, and that you can engage with consistently, day after day.
Some of the most popular money management apps and services around today include things like Mint — primarily for expense tracking and a good overview of where your money is going, and where you would like it to go — and You Need a Budget — for managing a dynamic, personal, zero-based budget according to the “envelope” budgeting system.
Use a habit tracker and anchor your budgeting to an existing habit of yours
Any time you want to establish a habit in your life and really make it stick, utilising a habit tracker can be a very effective step to take — as consistently repeating the action day-after-day will always have the effect of helping to ingrain it and make it “stick.”
Most habit tracker apps and services today rely on the premise of helping you to cultivate a good “habit streak,” where you have performed the given habit for as many days in a row as possible.
Good habit tracker apps also tend to include features intrinsically designed to boost motivation and engagement — particular “gamification” elements, such as the effective use of scores, bright colours, sound effects, and more.In addition to using your habit tracker to follow and develop your new habit properly, seeking to “attach it” to another habit — such as by, for example, doing your budgeting right after checking your emails on one day of the week — can help significantly.