Posted on August 9, 2016 in Budgeting

How To Make A Realistic Budget

Maybe you’ve got a handle on how much you spend each month, and you’ve even created savings goals and limits for each category of spending. But let’s face it—sticking to a monthly budget is easier said than done. When you happen to be driving past your favorite restaurant at dinnertime, or that department store sale is just too good to pass up, what strategies can you use to stop spending and start saving?

Here’s how to make a budget you’ll actually stick to when push comes to shove.

1. Create a Personalized, Realistic Plan
Every day, people vow to save more and spend less—but if their budget plan is too stringent (or too relaxed), they’re setting themselves up for failure. For example, if you’ve vowed to eat only organic fruits and vegetables, it’s probably impractical to budget $150 per month on groceries (unless you’re an avid gardener and can grow your own produce). The key to successful budgeting is creating a practical budget plan that fits your personal income, goals, and lifestyle.

2. Focus On Your Goals
Start by determining your essential expenses—things like groceries, rent or mortgage payments, health insurance (if your employer doesn’t provide it), and car insurance—and weighing them against your monthly income. Then make a list of measurable goals that you can achieve in a set amount of time.

For example, if one of your big goals is to pay off loans or a credit card balance, prioritize paying down the highest interest debt first. Then decide how much you can allocate toward each debt category per month and come up with a realistic timeline to knock out those loans. Make sure to schedule a big party or nice dinner for the day you’re done paying off your debt.

You’ll also want to make a list of savings goals. Start with the standards: a 3-6 month emergency fund and a retirement account (such as your company’s 401(k) or an IRA), but don’t sacrifice saving for the fun things in life. Want to backpack across Europe next year? Better to start saving now than decide last minute to put the trip on a credit card (and pay the accompanying interest). When you save money for the things that matter to you – like travel, for example – you appreciate the purchase that much more.

To keep your savings goals front and center, try out an app like Dobot. Not only does Dobot help you identify ways to save money by analyzing your income and spending, it also lets you assign savings to multiple goals. Instead of funding a generic “savings account”, you can fund the things you really care about and visualize your progress toward meeting those goals

3. Seek Out Camaraderie
It might feel like you’re the only one trying to live on a budget, but the truth is, you’re not alone. Talk to friends and family and find a buddy or two who’s willing to hold you accountable. “You need to know you’re not the only person setting sane financial limits for yourself, and it helps to be able to talk things over,” writes Annie Mueller over at Investopedia. “You can also have accountability with your frugal buddies and check each other on sticking to those budgets.”

4. Celebrate Milestones
As you establish a realistic budget and start saving for your goals, it’s important to celebrate each step along the way. If you came in under budget on your grocery bill this month, go to the movies or out to dinner with that extra cash. Larger milestones like paying off your car, student loans, or mortgage are worth a more sizable reward—and planning the celebration ahead of time can serve as a motivator while you’re still working toward the goal.

5. Keep a Healthy Perspective
Remember that budgeting is a tool to help you become financially confident, not a rope to tie you down and keep you from having any fun. The ultimate goal isn’t to learn to live on bread and water—it’s to put your money to work for you, lowering your stress level and improving your quality of life. In fact, the more you stick to your budget, the more you just might love what it does for you.

Interested in trying out Dobot to help you save and stick to your budget? Download the app on the App Store & Google Play.

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