Remember when you had high hopes for that fancy money-saving app you dowloaded at the beginning of this year, promising yourself you'd use it every day to stick to a budget and kill your Starbucks habit once and for all? And how just last week, you found yourself IN LINE AT STARBUCKS buying a $6 unicorn frapp, the final nail in your budget's coffin?
Falling off the budget-band-wagon happens to the best of us — an unexpected car repair bill, extra back-to-school supplies or last-minute travel for a family event can throw off even the most diligent of savers and spreadsheet-trackers. But most of us don't even try: a 2016 U.S. Bank study found that 41% of Americans don't keep a budget at all. And we end up overspending as a result — 38% of people said they spend more money than they expect to during the summer months in a recent survey by MassMutual.
“People have to get real about their spending, and they’re just unconscious about it,” says Sarah Carlson, a certified financial planner at Fulcrum Financial Group based in Spokane, Wa. "You need a system in order to really change patterns of behavior,” she says.
Has your busted budget given you the blues? Here's how you can get it back on track ASAP.
Reframe the Problem
Instead of dragging yourself down with yet another chore that sounds exhausting — managing and enforcing a strict budget — describe the task to yourself as a positive step in the right direction. Give the control back to yourself so you don’t approach financial problems with dread, Carlson says.
“Rather than say ‘budget’ instead say, where are you choosing to spend your money?” she says. Realizing where your paycheck goes in the present lets you think about what else you could do with those funds in the future if you start saving instead.
Write It Down
While it may sound basic, perfecting a few "old-school” techniques like writing down your spending in a daily money journal does the trick for many people, Carlson says.
“It helps you figure out: where did it go?” she says. Writing down your purchases forces you to be conscious of every dollar every day.
Break down your expenses into two categories: Necessary “have to haves” (mortgage payments, utilities, and healthcare) and discretionary “want to haves” (new clothes, vacations, etc.). This will help you see clearly where you can make changes; most people have to pull back on their discretionary spending to get back on track financially.
Another tip to stay the course is to write out and literally post the numbers around your house, Carlson says. For example, if you have a debt problem, put a Post-it note on your bathroom mirror or in your bedroom so you are constantly reminded of your goal to pay it down.
“It makes you want to get rid of it,” Carlson says about your new eyesore.
But don’t beat yourself up if you do slip up and use your credit card again. Exercise some self-love and don’t get discouraged, she says. "Everyone makes mistakes. It’s part of the process of how you’re going to learn to get out of it [debt].”
Pay Bills Immediately
Money can be emotional. Many people with debt avoid reading their credit card statements or even opening bills at all because it's too painful. But "let's put it away, I'll deal with it later," is not a sound financial strategy, Carlson says.
Paying a bill as soon as you receive it helps reduce debt by ensuring you don’t incur any interest, late fees or other penalties, Carlson says.
Another way to stop yourself from ignoring bills is to pay for things immediately by using cash. Research shows that people spend 12-18% more when they use a credit card instead of cash.
The bottom line? Be proactive, Carlson says. Start tracking and writing things down now, even if you haven't outlined a complete plan just yet.
"Americans that have spending problems live with incredible stress,” Carlson says. “It triggers a lot of fear. Life is too short to live in angst.”