How good are you at budgeting? Do you even have a budget? If the answers are ‘not very good’ and ‘no’, don’t be too surprised if you haven’t had much success at investing either. While the two areas may seem to be unrelated, nothing could be further from the truth. People who are good at budgeting on a daily basis will typically have more cash available to invest, and thus will be able to build a bigger nest egg with it.
How to reserve more cash for investments each and every month
Since most of us aren’t lucky enough or fortunate enough to get a pay raise every single month, it’s best to tackle this challenge from the other direction. You should focus on your outgoings so you can find ways of reducing them. Don’t look to reduce one thing in a big way – look at ways of reducing lots of things in small ways. This is the best way to get a bigger amount of cash left at the end of the month that you can invest in whatever way you wish.
Keep it up
Anyone can create a budget but it takes real determination to stick to it for the long term. You are more likely to do it if you write your budget down instead of doing it in your head. Put it somewhere where you will see it every day.
You might find it easier to pay for some things in cash too. For example say you work out a budget that provides you with, say, $10 a day for incidental expenses. Having that money in cash makes it a lot more difficult to spend. If you pay for everything by credit card you’ll find it more tempting to go over your budget.
Fix a reward for sticking to your good budgeting habits
Saving money and investing it wisely is definitely a good thing. But in reality you should also think about rewarding yourself when you keep up these good habits.
For example, if you manage to meet your budgetary constraints for one month, treat yourself to something that will mark your success. Think about eating out or grabbing a takeaway for example. Perhaps you go enjoy going to see a movie or celebrating your good habits in some other way. A monthly goal like this makes it more exciting to try and meet your financial targets and stick to your good habits for longer – preferably for good.
Be prepared to fail
You should also be aware that you will very likely slip off your path and spend too much from time to time, especially in the early stages. Don’t worry too much about this; just acknowledge that it has happened and be ready to get back on track again. It’s up to you to decide whether your good habit is ruined for a single day or for a much longer period of time. If you opt for the former you’ll be back on track again the very next day.
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