Everyone tells us to have savings goals and they’re not wrong. Yet, the reality is that all of us have a certain lifestyle that we’ve become accustomed to and aren’t willing to give it up yet.
The best way to work around this is to start small. Begin planning your personal budget by calculating how much you spend each month. You need to know where your money is going.
Start by creating a list of all your regular expenditure (food, shopping, monthly subscriptions etc). Don’t just stop there. For a more holistic view, you want to be tracking how much you spend on gifts and holidays too.
You may initially think that you spent more than usual this month because of a special birthday celebration but chances are next month you’ll attend a baby shower and in the following month, you’ll attend a wedding and the month after that, you’ll take a trip to Bali. These seemingly “unexpected” expenses need to be included in your plan or your budget won’t be realistic.
Next, you want to be looking at how much you earn in total. In addition to your monthly earnings, consider other sources of income like your annual bonus, earnings from rental income, interests from banks and dividends from your investments.
Now once you’ve put those two together you can quickly see where your money is going. Are you spending too much on shopping? Are you overindulging on holidays you can’t quite afford? Are you spending a little too much on indie cafes and hotpot dinners? Once you’ve identified where most of your spending is going, find little ways of tweaking it.
Are holidays your kryptonite?
For instance, if you’re spending too much on food then perhaps you might want to consider looking out for food promotions or apps that offer deals and plan your meals around these offers. If holidays are your kryptonite then you could consider booking your flights and hotels in advance or during promotions to get the best deals. You may even want to consider travelling to countries close by where possible. The aim is to start small.
Based on these little adjustments, you can then start to set a realistic savings goal that you can actually reach.
If you haven’t been saving anything at all, don’t worry, it’s never too late to start. You can aim to simply start spending less than what you earn. Even if it’s just $100 of savings a month, it’s a good start. If you’ve already been saving a little then challenge yourself to save 10% more.
It’s the small adjustments
Making these small adjustments and sticking to a budget can be a little hard to get used to at the start. Which is why you need to know your reason for setting a budget in the first place. Is it to get out of debt or have a bit more disposable income? When you know why you’re saving, it’ll be a little easier to adjust your lifestyle. Remind yourself of these reasons especially in the moments that you want to throw the budget out the window.
Be sure to get some support from your peers (especially if they’re your food or holiday buddies) and stay accountable. If you realise that you aren’t hitting your goals, don’t abandon them! Simply re-adjust your goals to be more attainable. While sticking to a budget may be daunting at first, your future self will thank you.