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5 Tips to Budget Discipline

5 Tips to Budget Discipline

November 18, 2022

As we come to the end of the year, many of us may not have had the financial success we were seeking. Bad markets, high inflation, and higher costs may have eaten in to the savings we were able to accumulate in the immediate aftermath of the pandemic. Typically, in my conversations with clients, I tell them that financial discipline begins with doing the small things well. Once we've developed the habits to be successful in the basics, we can grow from there. With that being said, I thought I'd share 5 Tips to Budget Discipline.

  1. Understand your current spending habits. You may have poor habits without even realizing it, including shopping when bored and making impulse purchases. Problems usually arise when there is a lack of planning for and budgeting expenses. Many people bristle at the notion of having a "budget", but when you change your language and instead develop a spending plan, it can change your attitude toward your money. Remember. You control the money; the money shouldn't control you. If you give it the instructions, it will follow.

  2. Find a budget method that works for you. Some people are pen and paper folks, while others prefer budgeting apps. No matter what, find a method you’ll stick with long-term. Understand what your goals are and what your spending should be. In the end, having a method creates better accountability and transparency in your finances.

  3. Review your bank statements. Look at your overall spending weekly or monthly. You might use your debit card without realizing where the money has been spent, so this can help you identify habits and cut unnecessary expenses. Reviewing bank statements helps you identify your spending leaks.

  4. Set up automatic payments and automatic contributions to an HSA. Some people don't like having automatic payments because they don't want to see money leave their account, or they are afraid it will lead to overdraft fees. However, automatic payments also create accountability. When you know money must be there for particular bills, it also creates disciplines discretionary spending. I always say, set up automatic payments for necessities, like rent, mortgage, car loan, etc. because they are easy to predict. Also, review your paychecks and deductions to maximize savings, especially for what your employer matches like 401k. Use an HSA to take advantage of tax savings and save for future health expenses for you and your family.

  5. Set financial goals

    . This can get you motivated and ensure you stay on track. Make them S.M.A.R.T.; specific, measurable, actionable, realistic, and time-bound. This helps you build momentum for financial self-care. Goals could be paying off one credit card by the end of the year, creating an emergency fund or monthly investing.

Hopefully, these tips are helpful. As we close the year, this can be a perfect springboard into 2023. This is a great way to help you Kobo Make Cents!