Many people view budgeting as a never-ending exercise in self-denial, characterized primarily by the word “no”.  But it doesn’t have to be that way.

Instead, think about budgeting as the connective tissue between where your money is going this week, this month or even this year and the life in retirement you’re working toward.  When seen in that light, budgeting can be remade into an affirmative tool,  an integral part of a fruitful and constructive financial rhythm aligned with your values and goals. And regardless of where you are financially, consider this: Staying within the reasonable guidelines you’ve set with your budget is like saying “yes” to a fulfilling retirement.

One key to budgeting success is adhering to (and perhaps automating) a system that you’re motivated to use. Budgeting apps such as YNAB (You Need A Budget) and Mint.com are great tools to help you reach your goals. Less important than the type of system you choose is that it works for you and that you’ll actually do it—whether you prefer software with all the bells and whistles, a spreadsheet, or a simple pen and paper.

Whatever path you decide to take, here are some tips you may decide to employ to help you budget on your terms.

• Track your spending for a month. People know where their money comes from, but sometimes not where it goes. Try tracking your receipts for 30 days just to see where you’re spending. It can also allow you to see the bigger picture, grouping bills for the month, not just the week.
• Use cash. This can force you to be a conscious spender. Blindly using your credit card defers the decision about whether or not an item is “worth it” until your statement comes due. And by that time, it’s too late. Using cash means you have to make that decision when you pay. Withdraw a limited amount of money and watch it dwindle. Since we’re motivated more by loss than by gain, each dollar you physically spend will create an impact (ultimately the good kind). Also, try using the envelope system.  Place the amount of money for each category in your budget into an envelope labeled with that area (e.g. groceries, gas, entertainment).  For those bigger ticket items such as upcoming vacations or that house renovation, consider the use of free online savings accounts that you budget for and contribute to over time.
• Share responsibility. Make sure everyone in the family is on the same page. If you are trying to lower spending but your spouse and children are not, you’re fighting a losing battle. Make a plan, together, and check up on how everyone is doing. If everyone shares the responsibility for the budget, everyone can cut back just a little and make a big difference.  One person shouldn’t have to shoulder the entire burden.
• Focus on saving. A benefit to finding “extra” money is that you can put it toward savings. Directly deposit or automatically transfer what you’re able to save, making the process automatic and taking the decision about whether to spend that money out of your hands. It’ll make a big difference later on.

All this doesn’t mean that budgeting won’t be a challenging task. But setting a budget, and then sticking with it as best as we’re able, can be a valuable way to find margin with our finances and ultimately our lives.  Because our belief is that clients who worry less about the money side of life have more time and energy to devote to the things that really matter to them.

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Waypoint Wealth Management