How to Stick to Your Budget

How to Stick to your Budget

Setting a monthly budget is one thing, but actually sticking to your budget each and every month is another!  In today’s society, you’re constantly bombarded by temptations that can lead you away from your plan.  TV commercials, an enticing “sale” sign and a beautiful store display can all tempt you to spend outside of what you can afford in your budget.  Never mind that you may not like to delay gratification for something that you want today!

But, the truth is, what you decide to do today will determine your future.  Having a budget in place to help eliminate debt and not consciously sticking to it, may make our lives enjoyable today, but will give us much misery in the future.

Here are some tips to make sticking to a budget a bit easier:

Set specific financial goals

Since you’ve most likely put a budget in place so you can attain financial goals, it’s important to get specific by providing numbers and deadlines for your goals.  For example, instead of “My goal is to save enough for a down payment on a house”, a better one would be, “My goal is to save $2,083 a month for a 20% down payment on a $250,000 house in 24 months”.  Setting specific goals gives an idea of how well or how poorly you’re doing.  In turn, possibly enticing you to be more disciplined with your budgeting or allowing yourself a pat on the back!

Be realistic

In terms of goal setting, it’s important to set goals that are reasonable.  Not ones that are setting you up for failure right from the start.

It’s also important to be realistic when you’re setting up your monthly budget.  Say you’ve discovered that you spend, on average, $800 a month on groceries after you’ve tallied up your receipts from previous months.  Don’t decide that having a budget of $500 for groceries is “totally doable” since you have to “reach your financial goals as fast as you can because you’re so excited”.  This is just setting you up for failure. I’m not saying it’s not impossible to eventually get your budget down to $500 a month, you’ll just want to work slowly, one step at a time, at reducing your monthly grocery budget.How to stick to your budget. These are some fantastic budgeting tips to make sticking to a budget easier!

Have accountability

Think about the last time you started a workout routine or tried to kick a bad habit; having a partner by your side, holding you accountable is crucial. Involve your family (or a very good friend) in your plan. Explain why you need to scale back on some areas, and get their input and encouragement on those things. From here, review your budget once a week with your family (or very good friend) to make sure that you’re on track.  Not only is it good to have someone help keep you on track, it’s great to have someone helping you celebrate your successes!

Use cash

If you leave your debit cards and credit cards at home and only bring the amount of cash that you have budgeted, then that’s all you’ll be able to spend. So if your budget allows you $100 at the grocery store each week, then only bring $100 with you.  (These printable Cash Envelopes are a fantastic tool to help you organize your cash.)

You’ll be more likely to avoid those unnecessary items that might otherwise end up in your cart. They may not seem like a big deal because they’re only a few bucks, but when you end up at the checkout with $110 worth of items, you’ll be forced to put some things back, making you prioritize and forcing you to stick within your budget. If you had your debit card with you, chances are you’d think “It’s only a few dollars”, and you’ll find yourself short at the end of the month.

Remember your goals

As you go about the daily life of living within a budget, it’s important to remind yourself often of why you’re living on a budget. Is it because you want to save enough for that winter vacation? Or maybe it’s to pay off your consumer debt. Regardless, it’s important to constantly remember your financial goals to help fuel the excitement of what’s to come, if you manage to successfully stick to your budget. It could help to write down your financial goals and carry them around with you in your wallet or purse. Every time you pull out your cash and look at those goals, you’ll be reminded of the reason you have a budget.

Reward yourself

When you divide your big goal into several mini goals, make sure you reward yourself each time you accomplish one of those mini goals.  Not only will this help spur you on, you’ll also start to feel as though your big goal could definitely become a reality if you stick to it.  Your reward may be as simple as a long bubble bath or a bowl of ice cream; or as extravagant as a fancy dinner out.  Of course, as long as it is still within budget! Here are some great ideas to treat yourself for free.

What are the things that you do to make sticking to a budget easier? Let me know in the comments below.

8 Weeks to a More Organized Christmas: Create Your Holiday Budget

How to create your Christmas budget. Sit down with a hot drink and create your Christmas budget with these tips! #Christmasbudget #budgettips

Are you excited to work your way to a more organized Christmas?  Today marks the first day and task in the 8 Weeks to a More Organized Christmas series that I hope will be super helpful to you!

Before we get started, I have a whole bunch of printables and checklists for you to print out to help you along:

Alright, on to the first task, an important one. 🙂 This week, if you haven’t already, sit down with a hot cup of tea, coffee, hot chocolate… and create your holiday budget.  This is what you think your holiday season will cost and will allow you to put limits on your holiday spending to keep you from shopping regrets if a credit card bill comes your way!

Related: How to Have a Merry Christmas Without Spending a Dime

Here is an extensive list of things you should keep in mind when you create your holiday budget:

Gifts:

  • spouse
  • kids
  • parents
  • siblings
  • nieces/nephews
  • grandparents
  • neighbors
  • coworkers
  • friends
  • secret Santa gift exchanges

Activities/Events/Parties:

  • tickets
  • dining out
  • clothing

Food (not including regular groceries):

  • baking ingredients
  • dessert ingredients
  • Christmas eve
  • Christmas dinner/brunch
  • Boxing day
  • parties

Cards:

  • stamps
  • cards/envelopes
  • stationary for family newsletter
  • photos

Clothing:

  • outfits for photos
  • parties
  • Christmas day outfit

Decorations:

  • tree
  • lights
  • ornaments/candles/wreath/etc.
  • craft supplies

Giving:

  • charities
  • volunteering

Now, these suggestions are just a guideline. Every family is different and has different needs. My intent is to bring to mind every possible thing that could incur an expense during the holiday season.  I’m sure many of you won’t even spend money on half of these things this year. Also, in my mind, the more planning you do, the more money you will save and the saner you will feel. 🙂

As for my family, we only buy gifts for immediate family and a couple of close friends. My husband and I only exchange stockings. I make some homemade gifts as well as collect credits throughout the year so I can do some online shopping for “free”. Of course, I search for deals too. I will probably buy a few inexpensive Christmas decorations this year. This year, I’m toying with the idea of having a cookie decorating party with the girls’ friends. I think that would be fun! As for any party that we are invited to, I like to bring some baking along.

But enough about us.  🙂

If after writing down your expenses, you’re scared of the number you see, you have two options: Decrease your expenses or increase your income.

Decrease your expenses

To make a happy holiday season, you really don’t need to spend a lot of money.  In fact, I’m daring to say, that being extravagant in your spending can be overwhelming not only to you, but the recipient as well. When I was a child, one set of grandparents used to be quite extreme in their gift giving.  It was SO exciting, but I remember being quite overwhelmed with all the gifts once Christmas was over.

Gift giving is probably the easiest expense to cut back on.  If you have a large extended family, consider drawing names so each member is only responsible for one gift.  Or do what our family does and only give gifts to the children.  My parents have also started to set a $20 limit on each other in recent years.  Jesse and I exchange stockings.

Setting a price limit on each gift will allow you to shop within that budget.  If your limit on sister Sue is $30, then that $50 purse is off limits.

It’s possible to decrease your food budget too by shopping the sales and limiting the baking and Christmas dishes you prepare.

When it comes to decorations, why not create some memories by making some homemade decorations?  (I’ll be featuring some ideas in a few weeks)  Or read my Fond, Frugal Christmas Memory post for a fun Christmas tree idea.

Increase your Income

If decreasing your holiday expenses is not an option, then consider increasing your income.  Many retailers hire for the holiday season (and may offer an employee discount!).

A couple of other ideas are to:

  • Sell extra baking to those that may not have much time to create their own.
  • Sell unwanted household items for cash (make room for new stuff too!)

What are your tips for staying on budget at Christmas time?

Sign up for the 8 Weeks to a More Organized Christmas newsletter to receive a FREE Christmas Dinner Checklist!  This checklist is quite detailed and will help you remember all the details needed for a memory filled dinner with family and friends. You’ll also receive a weekly email with each week’s “task”.

Not only do I want a more organized Christmas season of my own, I'm hoping I can help you as well! Introducing... the 8 Weeks to a More Organized Christmas series!

How to Painlessly Save Money

How to easily save money

It’s a brand new year.  A time when we all have an excitement for a fresh start.  A time when we decide we’re finally going to get our act together. We start out great, but then we tend to get tired over time and go back to our old ways. Getting financial situations back on track rank high on the “fresh start” list.

Below I’ve listed a bunch of ways to make saving your hard earned cash easier and way less painful!

Set up automatic deposits

Have your bank move a set amount of money automatically into your savings account each month.  Whether it be $50 or $500, if you don’t see the money in the first place, you’ll never miss it!  And at the end of the year you’ll have a very nice amount in your savings account!

Stay home

By staying home more often, you’ll save money on gas, impulse buying and even free up precious time for the things you really want to do!  Let this be a time when you encourage yourself to learn new skills such as learning to make bread from scratch, or learning to recreate your favourite restaurant meal at home, or even learning simple wood working techniques to build a shelf. Involve your children so they learn the value of being creative.This is a great list of 6 ways to painlessly save money! The tips make saving your hard earned cash way easier!

Put extra money into savings

Did you receive a bonus at work? Or a cash gift from Grandma? Why not put it all, or a portion, into your savings account?  Since the money was unexpected in the first place you shouldn’t miss it once it’s safely away in savings.  Just resist the urge to spend it right away on something that caught your eye if you’ve got some financial goals you’d like to accomplish.

Once you’ve finished paying a big bill, put that money into savings

Did you just finish paying off a car loan?  Pretend you haven’t paid it off yet and put that same amount into savings or onto another debt. Be your own bill collector.

Shop for things you need, not for recreation

Recreational shopping used to get me in lot of trouble. I would shop when I was bored. I’d also wonder why I was never saving money and why I never had time to do the things I really wanted to do, like read a book!  Once I stopped treating my boredom with shopping, I discovered the things I really needed to buy were essentials and I discovered ways to occupy myself that made life more meaningful. I stopped cluttering my house up with useless stuff too!

Shop with a “frugal” friend

If you have a tendency to overdo it during your shopping trips. take along a trusted friend that has a more frugal mindset then yourself.  Nothing like a sensible person to reign in your personal spending habits!

Have you got any more recommendations on how to painlessly save money? Let me know in the comments below!

Free Printable Monthly Budget Form

If you are struggling with getting your budget under control, then you’ll want to download this free monthly budget form right away!

If you are struggling with getting your budget under control, then you’ll want to download this free monthly budget form!

There are spaces to add your income and expenses, a place to record your savings goals (for example, if you are saving up for a vacation, you can write down your progress each month), and a place to write down any notes related to your spending. Having everything on one sheet of paper should be helpful for you!

To get a copy of this free monthly budget form, simply enter your email address below:

(Make sure to check your email inbox to get your link to the form!)

How To Make A Budget That Works For You

How to make a budget

Here are some tips on how you can create a budget that works for you:

Most people have difficulty creating a budget and actually sticking to it. That’s because it can get pretty restrictive and time consuming. The good news is, you don’t have to make it hard. You can find ways of making a budget that works for you. 

Instead of focusing on your expenses, try instead to concentrate on your savings. This process of reverse budgeting lets you figure out how much you need to save every month. Once you are able to figure this out, you can then set it up so that you have that amount going into your savings account automatically. That way it’s sort of like “out of sight out of mind” and you don’t really miss it or end up using it.

Money Goals

Before coming up with a budget, it’s important that you write down your short term goals. Doing this will increase your chances of success. This is because when you write down your short term goals, you’ll be able to fully understand the big picture. You get to see what it is you are saving up for and how you can accomplish that goal in the future. 

Start by writing your goals out. You can do this for the next 3 or 6 months, 1 year, or even 5 years or more, it’s up to you what fits your needs. Remember to include the date you want to complete them along with the expected cost. After you have written down your goals, that’s when you can determine how much money you need to set aside on a monthly basis. Here’s an example:

By simply dividing the cost of the goal with the months you have available to complete the goal.

Cost of goal: $2000
Months to complete goal: 12
$2000 divided by 12 = $166.66
So you need to save $166.66 each month for 12 months to reach that $2000 goal.

How to make a budget that works

The next task is to number the goals by assessing their priority. 

You can also do the same for your intermediate term goals and long term goals. Remember that if you are unable to meet the monthly savings needed to complete your short term goals after figuring out your expenses, you may need to reevaluate the things that are important to you and make necessary adjustments. What you don’t want to do is quit. You want to adjust. You can do this, but be realistic when setting your goals.

Automatic Savings

It is a wise idea to set up an automatic withdrawal from your main account or paycheck that goes directly into your savings account. This way, you won’t have to withdraw the money from your bank which can make it tempting to spend on unnecessary items. 

When you’re opening a new bank account to do this, make sure that you choose an account that will earn you a higher interest rate. This is because you won’t be touching the money for a long period of time. If you let the interest accrue, it means that your funds will grow as long as you leave them in the bank. 

As soon as the account has been opened, and you have your expenses figured out, set up an automatic monthly withdrawal with the amount that meets your goals. Then forget about it.  Use your regular method of paying bills and ignore this new account so that it can grow and not be used as a backup and you’ll be on your way to meeting your savings goals in no time flat.

Trying to make another person’s budget and lifestyle work for you is probably setting yourself up for failure. You have to find something that works for you. Be kind and understanding to yourself. If you fall, get back up and keep going! Just. Don’t. Quit.

How to take money from your RRSP without paying tax

This post is a sponsored post written by Sun Life Financial. See my disclosure policy here.

Sometimes, you CAN take money out of your RRSP without penalty. But you have to pay your RRSP back – or pay the tax.

Sometimes, you CAN take money out of your RRSP without penalty. But you have to pay your RRSP back – or pay the tax.

Are you looking at a major expense you didn’t see coming? Short of available cash? Perhaps you’re thinking about tapping your registered retirement savings plan (RRSP). It’s your money, after all, so why not?

Here are three good reasons why not.

1. You’ll owe tax

The first is the tax bill. Since you used pre-tax income when you put money in your RRSP, you’ll have to pay tax when you take it out. And while there’s no tax on investment growth inside your RRSP, you’re taxed when it comes out. RRSPs make sense because you’ll typically cash them in after you retire. That’s when your income and your tax bracket will likely be lower. You’ll still pay tax, but you’ll pay less. If you take the money now, while you’re working, you’ll face more in taxes.

2. You’ll miss out on investment growth

The second reason is lost investment growth. Every dollar you take from your RRSP is a dollar less to build up through compounding. So that little nibble from your plan today could mean a big bite missing from your savings come retirement.

3. You’ll use up contribution room

And the third reason: When you take money from your RRSP, putting it back generally uses up your contribution room. What’s contribution room?  Each year you can put as much as 18% of your earned income from the previous year into your RRSP, up to an annual maximum. The difference between your limit and what you actually put in your RRSP is the unused contribution room. You can carry that forward to use another year. Unused contribution room plus your annual maximum becomes your total contribution room. But whatever you put in your RRSP – replacing a temporary withdrawal or making a brand-new contribution – can use up contribution room. Let’s say you take $5,000 out of your RRSP this year and plan to pay your RRSP back next year. That repayment will reduce your contribution room by $5,000.

There are two ways to avoid paying tax on RRSP withdrawals, without using up contribution room:

  1. Use your RRSP to help buy your first home, or
  2. Use it to go back to school.

What’s the RRSP Home Buyers’ Plan (HBP)?

Are you a first-time homebuyer living in Canada? If so, you can borrow up to $35,000 from your RRSP to put towards a down payment. If you and your spouse are buying together, that’s $70,000 you could use for your home.

The HBP lets you take out the money tax-free. But there’s a catch: You have to pay it back in equal installments over 15 years. Any year you don’t pay the full installment, you have to pay income tax on the outstanding balance. You’ll also lose the chance for that money to grow within your RRSP.

Thinking of using the HBP? When you’re crunching the numbers, be sure to include the RRSP repayments along with your mortgage payments.

What’s the Lifelong Learning Plan (LLP)?

This is another way to take tax-free money from your RRSP:

  • Take out up to $10,000 a year, for a total of $20,000.
  • You can spread those withdrawals over a maximum of four years.
  • Use that money for full-time education or training for yourself, your spouse or partner. 
  • As with the HBP, you need to repay your RRSP or pay income tax on your withdrawal.
  • With the LLP, you have 10 years to repay your RRSP in equal installments.

What about the tax-free savings account (TFSA)?

You might need money for anything at all – not only buying a home or going to school. An option is your TFSA. You don’t pay tax on TFSA withdrawals for any purpose. You’ll still lose potential investment growth while your money is out of the account. But your contribution limit will grow back. Whatever you take out gets added to what you can put in the following year. You can pay your TFSA back according to your own schedule.