Following a budget allows you to save and invest more money.
A common misconception is that the more money you make, the less you need to budget and save because you make a lot of money. Those who are financially stable all created a budget. America’s millionaires are disciplined, that is what separates them from the rest of us. Majority of them have created yearly budgets, which they then break down into monthly and even weekly budgets. If you have not yet, please read our article on how to create a budget.
By following and adopting these 4 simple steps, you can take action to become a great budgeter. Creating a budget allows you to save money, which you can then invest into low cost index funds. These 4 budgeting tips will serve as a great foundation for you, as you begin creating the perfect financial budget.
1. CANCEL THOSE SUBSCRIPTIONS
Yes, we all have our various subscription’s. We all have Neflix, Hulu, Apple Music, or Spotify subscriptions, etc. There are so many subscription services that are constantly draining your monthly income.
Although each service may have a small fee of $4.99 or $9.99, everything adds up when you analyze your budget.
One simple solution would be to first cancel any subscription that you are not actively using, or simply just share the service with friends and family.
There is no need for you to be the sole funder of a subscription service if multiple people are using that same account.
As a Broke-Millionaire I still split my Netflix and Spotify accounts with both my brother and sister. This drastically decreases my annual expense for these services, and allows me to invest my money through our easy to follow dollar cost averaging strategy.
And it is not just me who splits these subscriptions. In fact, a member on this community told me that him and his college roommates split all of their subscriptions. Together, they have a Netflix, Hulu, Spotify, and a premium Sound Cloud account.
If you ask me, I think it is a bit of an overkill, but they all use them enough where it is worth the expense. Again, they are splitting up this cost, which frees up capital to invest into their Roth IRA or Brokerage account.
2. A NEW MONTH MEANS ANOTHER PAYCHECK
You need to treat each month as a brand-new month. Never rely on income from the previous month to support your expenses. Obviously, this does not entail any large purchases that you need to save for, just your normal monthly expenses (rent, food, gas, ect).
This will help you start becoming a great budgeter if you can “live within your means” and not make any irrational purchases that may drain your accounts.
Each month should facilitate a brand new budget. Whatever your income for that specific month is or is estimated to be, balance your budget to where it can perfectly align with your monthly income.
If you are struggling with creating a personal financial budget, follow our easy to use guide which follows the 50/30/20 principle.
This may be slightly difficult for you business owners, bloggers, or any job that does not have a steady income. However, it is important to estimate revenues from previous months or years to allow yourself to create a budget that suits your business.
If you have any spare cash from the previous month you need to invest it. If you haven’t already, I strongly urge you to read our Dollar Cost Averaging Strategy. It is the easiest investing strategy to use!
3. HAVE A GOAL AND BE MOTIVATED
Listen, even if you want to save $1 extra a month, write it down or tell someone that will assist you!
Have a set amount of dollars that you plan on saving each month and actually stick to your goal.
Don’t follow these tactics for a week or two and wonder why you are not seeing any results. Budgeting is a slow and steady process that requires time, discipline, and strategy.
This may be a bit overkill, but I write down weekly financial goals. For the most part, they are small, but again it all adds up. I always try to save an extra $20 a week and invest it.
This has been my weekly goal of mine for about three years, and I am finally starting to see how powerful it has become thanks to compounding.
4. AVOID SPENDING MONEY
If you are wondering why it is so hard to save money, it is probably because you are spending too much time at these money traps.
I consider a money trap to be a place such as the mall, outlets, Amazon, really any place where you are constantly tempted to spend money.
With out a doubt, if you spend less time at these places, then you will ultimately spend less money.
Don’t go on big shopping spree or buy unnecessary items, this will crumble your monthly financial budget.
The real trick is to stop going out every weekend and conserve your capital. Don’t get into the mindset that to have a fun life, you need to go out and spend money.
Controlling and dominating your financial budget requires you to make sacrifices.
We have said it before, but our goal is to help you achieve financial independence.
Every top CEO or Business owner will echo these same principles of conserving your hard earned capital by sacrificing expensive habits.
This may seem like unpopular opinion, but if you are seriously trying to control your budget and save money, then discipline is an essential principle that will ultimately help you succeed down the road.