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How to stick to a budget

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    Budgeting can potentially be a simple, yet powerful tool to help manage your finances, but learning how to stick to a budget may take some practice. Successful budgeting requires discipline, flexibility and a clear understanding of your goals. Let’s begin the journey with a few simple steps on how to stick to a budget once and for all!

    Create a realistic budget

    Creating a realistic budget doesn’t mean you can’t spend. It means working with what you have, understanding where your money is going and figuring out where it may be better spent. Here are a few things to keep in mind when setting up a budget:

    Understand your income and expenses

    Before making any major cuts to your spending, consider evaluating the balance of your incoming and outgoing cashflow. Your bank statement and transaction history may be a good place to start as they provide detailed reports on your income and routine expenses.

    Track and prioritize expenses

    Tracking your spending decisions, even the small stuff, might help you stick to a budget by giving you a clearer picture of your financial habits. You may discover spending habits that have gone unnoticed and target opportunities to save. Doing so may help you better understand what’s important to you and establish new boundaries to help prevent overspending.

    Set realistic goals

    Whether you're dreaming of a future vacation, saving up for a car or building an emergency fund, setting clear, achievable financial goals may help you stick to your budget. Strong goals serve as reminders for why you're choosing to spend less in some areas, which could potentially make sticking to your budget feel more rewarding.

    Set SMART goals

    The SMART method is a common framework used to help people create well defined goals, which may help you stick to a budget. SMART goals help set a realistic budget by being:

    • Specific: Be clear about what you want to achieve. Instead of saying, “I want to save more,” be specific and say “I want to build a six-month emergency fund.” This helps you relate your progress to something tangible.
    • Measurable: Your goals should have a clear, measurable outcome. This could mean targeting a specific amount of money you aim to save.
    • Attainable: Setting a goal that’s too difficult to achieve might make it harder to stay motivated. If you’re aiming to save, ensure the amount is something you can realistically set aside given your current income and expenses, based on your budget reviews.
    • Relevant: Relevant goals are often tied to your current circumstances. If you’re highly in debt, paying it off may be more relevant than saving for a vacation. It’s about choosing goals you think will bring the most value to your financial security and overall wellbeing.
    • Time-based: Attaching a timeline to your goals and measuring your progress might help you stay on track. Whether it’s saving a certain amount or paying off your student loans in two years, the slight pressure of time may be exactly what you need to stick to your budget.

    Align spending with your goals

    Now that you know how to create a realistic budget, how can you ensure you don’t overspend? Once you’ve tracked your spending and identified your financial habits, you can start to prioritize your expenses. This is an opportunity to put your spending in the context of what’s most important to you. Here are a few ways to categorize your spending:

    Essential expenses

    Essentials are necessities for survival, like groceries, housing, healthcare and transportation. These are the things you typically can’t go without. Because of their direct impact on your quality of life, essential expenses are a top priority in pretty much everyone’s budget. Some essentials, like car payments or housing, may be fixed costs that don’t change from month-to-month, while others like groceries may be subject to occasional fluctuation.


    Now that your essentials are accounted for, let’s discuss nonessential, or discretionary, expenses. Discretionary expenses aren’t necessary for survival, but they do enhance your life. For example: eating out, entertainment, hobbies and travel. While these experiences may not be essential, they contribute to overall wellbeing and satisfaction. The key is finding a balance between your essential and nonessential expenses that lets you enjoy life’s luxuries while still sticking to your budget.


    While it may not be as exciting as a shiny new purchase, if you have some money left over after accounting for essential expenses, it might be time to start saving. Savings helps you ultimately achieve the financial goals you established earlier. There are different ways to operate savings accounts. Some may be earmarked for a specific financial goal, while others may be tucked away for emergencies.

    Use technology to your advantage

    One of the ways to stick to a budget in the digital age might be to harness technology. There are digital tools invented for the sole purpose of budgeting and expense tracking, from online banking platforms and budgeting applications to real-time alerts when you’re nearing budget limits. Some may have the added benefit of educational resources that help improve your financial literacy.

    Expense tracking tools, for example, may provide you with personalized data that help pinpoint areas of improvement in your spending habits. Automatic savings apps might help boost your savings by rounding up your purchases or scheduling routine deposits — potentially meaning more savings with less effort.

    Adjust your budget as needed

    A successful budget is rarely a set-it-and-forget-it venture. It changes with you. It may be helpful to revisit the budgeting fundamentals above to help stay in touch with how your budget is furthering your goals and whether it’s still relevant to your lifestyle.

    Your income, expenses and financial goals evolve, and each of these warrants revisiting and possibly adjusting your budget. A raise at work, an uptick in rent or a new financial objective all affect your budget.

    By reviewing your budget regularly, you’re more likely to notice where it may be falling short. Perhaps certain categories are spilling over, or you’ve improved your financial flexibility for extra breathing room somewhere else. Noticing changes helps you keep your budget reflective of your priorities.

    In summary

    Learning how to stick to a budget means embracing flexibility, setting SMART goals, picking the right tools and keeping a watchful eye on your finances as they change and evolve. Remaining dynamic and staying disciplined with your budget may help you make more informed decisions to potentially further your financial goals.

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