When it comes to setting regular routines, healthy eating and exercise goals are the most common that come to most peoples’ mind, but if you’ve checked your bank account and credit cards lately and though… oh no, you aren’t alone. For many individuals and couples, creating budget goals and spending/investing routines can be the key to getting out of debt, paying off loans and creating financial stability that allows for future saving and investing opportunities.
Here are three easy every day habits you can begin to help create a budget for your household that you can work with to meet your financial goals.
1. Make getting rid of debt a priority. For most Americans, handing out a credit card when funds are short can be an easy habit, but when it comes to paying them all off, that’s where the habit gets tricky.
According to the Federal Reserve’s April 2019 report on consumer credit, the average credit card debt is approximately $5,673 per United States adult with a credit card, and personal loans are becoming the fastest-growing form of consumer lending in the U.S., growing 19.2% in quarter one of 2019 according to a recent Transunion consumer report.
If you have debt, whether in credit card debt or personal loans, paying these down and even removing them completely should be a top priority before they start accumulating too much interest and spiraling out of control.
There are a couple of different ways you can pay off your debt effectively and faster such as paying off more than the minimum payment each month. Doing so will not only help you save on interest throughout the life of your loan or credit limits, but it will also speed up the payoff process.
2. Create a savings plan for holidays and special occasions. If you’ve ever used credit cards when you were out shopping for the holidays or celebrating special occasions, then you are probably aware of how quickly your balance can become an overwhelming figure, or how your savings can take an unwanted hit that takes months to recover from. To avoid this type of holiday financial hit, start saving now.
While it may seem silly to start saving for the holiday season in January, or for a Spring wedding, or summer birthday in November, if you start now and put away only $10 or $20 a month or per paycheck, over the course of six months you’ll be able to save money to spend on gifts or other holiday or celebration expenses that won’t hurt your day-to-day finances.
To decide how long you should save, sit down and create a budget you’d like to set for yourself for various occasions throughout the year and determine how much money per month or paycheck you want to put toward that holiday or occasion to determine when you should start saving.
3. Only spend money on the essentials. This can be tricky. It means being able to separate a ‘want’ purchase from a ‘need’ purchase. This can mean that for the next few months you’ll stop going out to eat, buying new clothes, reaching for the extra unnecessary groceries, or otherwise spending frivolously.
Begin by creating a realistic shopping list and account for the basic monthly expenses and try to only spend money on what you absolutely have to – rent, groceries, utilities, etc. so that you don’t have to dig yourself into a deeper hole.
Of course, that doesn’t mean you aren’t allowed to have fun or do anything for entertainment. Just try to find activities or events that are free or create a saving plan over the course of a few months to give you a manageable budget to enjoy without having to sacrifice the necessity down the road or go into debt to cover the needed expenses.
Additionally, as you stick to a limited budget, if you still have money left over after paying off your monthly necessary expenses you can put some into your emergency fund, retirement accounts or into a savings account, to get closer to your savings goals.