Tips for Budgeting Your Way to Financial Freedom

Many women face financial challenges and know that creating a budget can help. However, it’s an overwhelming exercise, with many guides pushing too many restrictions. As with many things, balance and moderation are key, even in the pursuit of financial health.

By breaking your budgeting efforts into simple steps, you can make progress over time and have a completely different outlook a year from now.

Here are some reasonable tips for budgeting your way to financial freedom.

Understand Where Your Money Is Going

One of the most common mistakes when engaging in the budgeting process is developing a budget as the first step. Before you can determine where your money should be going, you need to look at where it’s currently going.

Use an app such as Mint or You Need a Budget to evaluate what you’re spending your money on. In many cases, the simple act of building awareness is enough for people to make big changes. You might think you’re only spending $100 on takeout each month, only to discover that those quick lunches, coffee breaks, and dinners out are eating up a significant portion of your budget.

Looking at where the money is going can help you determine the high-priority items that should be addressed first.

Make Small, Sustainable Cuts

If you’ve tried to curb your spending before, you’ve likely engaged in the all-or-nothing mentality. Using takeout as an example, you might tell yourself, “I’m not ordering any takeout this month.” The problem with this mindset is that it creates a sense of restriction and doesn’t address what you can do to make it happen – for example, finding  some great dinner ideas that you can make at home.

Instead of trying a complete overhaul, start with small sustainable changes. If you’re spending $200 per month on takeout and restaurant dining, try to cut it back to $150. Instead of getting Starbucks every day, maybe you commit to only going on Mondays and Fridays.

These small changes help you practice discipline without feeling as though you’re suffering. Additionally, you’ll be learning the power of building habits so that you can expand your efforts over time.

Create a Debt Freedom Plan

The average amount of credit card debt in America is $6,270. Add the high monthly interest payments on top, and you’ll quickly find yourself paying more for something you already purchased months before. Striving to eliminate credit card debt is a lofty goal, but it can be done.

Put a debt freedom plan in place to help you eliminate a portion of your consumer debt. There are numerous DIY debt relief plans to consider, from the debt snowball to the debt landslide. Use these strategies, paired with your strategic cuts, to pay down your debt and find financial freedom.

Start a Simple Savings Plan

There’s a lot of debate surrounding whether the focus should be on debt payment or building savings. In reality, you should aim for a little bit of each. While getting rid of interest should be a top priority, starting a simple savings plan can help create a foundation for growth – not to mention give you some motivating pride in seeing your savings grow.

Start by having $20 automatically taken off each paycheck and put into a savings account that isn’t connected to your debit card. As you pay down your debts, increase that amount. Start with a simple emergency savings fund and expand from there.

Use Automation To Help

Since we’re on the subject of automatic transfers, using automation to pay your minimum credit card payments, bills, and savings transfers can be life-changing! Setting up that money to be gone before you can spend it will help take willpower and memory out of the equation entirely.

Set Fun Money Goals

Being a financially responsible adult is, in a word, boring. Planning for retirement can feel like such a far-off, abstract goal. That’s why it’s also important to include fun money goals and tangible rewards for yourself.

Consider something that you really want to purchase or do. Maybe it’s a new couch or a trip. Then, keep those goals at the forefront of your mind when you are faced with an unnecessary expense.

For example, you determine that your daily Starbucks costs you $5 per day on the way to work. If you forgo that expense and put the money into your trip fund, you’ll have $1,200 saved up for a trip in just one year. This strategy will help you say “no” and practice mindful spending to curb your impulses – because you know there’s something more important waiting for you at the end.

Changing your financial future will take work, but it’s not impossible. Start implementing these strategies to budget your way to financial freedom today.