Maybe you want to save for a big purchase like a down payment on your dream home, or maybe you just want to save money, period. Whatever your financial goals are, creating and sticking to a budget is essential. If you’re debating between developing a daily budget and a monthly budget, the solution is to do both. Sticking to a daily budget will help you achieve the goals of your monthly budget.
Before you can actually commit your budget to paper, you need to learn how you’re spending your money and where you can cut back. Track your expenses for about a month to get a clear picture of your spending habits. There are plenty of expense tracking applications available for smartphone users, so check with your mobile service provider and save yourself the trouble of carrying around a little notebook. You need to record every expense — down to those afternoon sodas from the vending machine at work. Some of the things you might consider to be minor expenses can really add up. Expense tracking will make it that much easier to create a monthly and daily budget that you can really stick to.
Once you’ve added up all your monthly expenses and deducted the total amount from your monthly income, you'll have an idea of how much money you have left over every month. Allocate some of the money to savings and some to getting those credit cards and loans paid off. Establish a daily allowance to avoid wasting money on too many lattes and going out to eat. Your daily allowance will vary from month to month depending on how many days there are and other variables. For instance, if you’re going to be on vacation one week, you might set a higher daily allowance. You should establish your daily budget at the beginning of every month. A daily allowance will help you become a more disciplined spender.
If you’re just starting to live within a budget, you may want to set small goals at first. For example, you might start out by committing to saving a certain amount of money every month or paying off one credit card at a time. You can also make daily goals. If you’ve allowed yourself a daily allowance of $20, you might establish a goal to save $10 of that amount every day and put it into savings.
The Big Picture
Maintaining monthly budgets enables you to more effectively track and visualize your progress toward reaching your financial goals. While daily budgeting is more essential to expense tracking and spending control, monthly budgeting helps you view the big picture. You’ll be able to see how you have reigned in your daily spending habits and reduced your debt as you work toward saving for that down payment on a new house or car.