How To Make A Budget (And Stick To It!)

2018 came as swiftly as it left and at the cusp of 2019, where do you want to see your finances in the new year? Maybe it is paying off outstanding debts, or opening up a retirement account, or putting more into emergency savings. In order to do any of this, you will need to make a budget.

Budget is one of those scary words that is used all too often in generic money-saving advice that all seem to say the same thing: buy less, save more. While that is not false, spending and saving are more complicated than that. I’d like to let you in on a secret: you can create and stick to a budget with little to no hassle! There are a few simple fixes to your spending habits that will keep you in the black this year.

1. Small Stuff Exists

Your morning routine may rely on a sojourn to Starbucks or your nearest coffee house. The National Coffee Association 2017 survey concluded that 64% of Americans drink at least one cup of coffee per day. Over half of the United States drinks coffee consistently.

But what is that cup of coffee costing you?

According to US News, the average cost for a cup of coffee in the United States is $2.70. If you are a peppermint mocha or java chip frappuccino sort of coffee drinker that price goes up to $3.85 or $4.25. Let’s break this down and say that a person spends on average $3 per day during the work week on coffee (or staying alive, either way). This brings the total cost to $15 per week, about $60 per month, and about $800 a year.

This number may not be astronomical, but it is still an amount nonetheless. Keep in mind that small expenses are present and see if those can be paired down. As an avid coffee drinker myself, I am not suggesting you cut coffee out of your life, maybe you just try to spend $2 on coffee at a place like Tim Hortons or Dunkin Donuts instead of the $5 for Starbucks.

Perhaps you will only go out for coffee on Tuesdays and bring a travel mug the remainder of the week. There are many simple ways that you can stick to your routine and save some money along the way. It is important to know that this small stuff will not make or break your budget. It is ok to grab a cup of joe or take a caffeine break with your colleagues just as long as you are paying attention to your spending habits as you go along.

2. Living Too Large?

Think about the big expenses that weigh you down: rent/mortgage and car payments. Here is where you can really make big moves to saving money this year.

Let’s take New York City for example: one of the most expensive cities in the US and one of the fastest and cut-throat real-estate markets in the world. In Manhattan alone, the average price for renting a one bedroom apartment is $3,000 per month. The other burrows don’t look much better with Queens at $2,200, Brooklyn at $2,500, and the Bronx at $1,750.

While this is only one city, it goes to show that people today are spending a majority of their paychecks on rent. There are some ways to help mitigate your expenses in the housing department:

  • Downsize
    • Consider moving to a smaller place or somewhere just outside of the city. Once you get a little farther away, real estate prices drop significantly. This is true for both rent and mortgage payments.
  • Refinance
    • If you have a mortgage with a high-interest rate, it could be time to look into other options. Finding a loan with a lower interest rate will decrease the amount of money you will have to pay back on the loan. I advise caution here, as refinancing often comes with upfront and logistics costs.
  • Find a roomie
    • Living with other people may not be an option for you, but if it is having help with the rent and utilities could be a welcomed benefit.
  • Start an Airbnb
    • Airbnb is taking over the hospitality industry. If you are in a position to try to rent out your space for extra money, do it! You will be able to meet new people while saving some money.

Another large expense you may have is a car. Many households have a car, it is how people get to work, the store, and travel. Making a car payment each month may be hurting your budget significantly. Here are some ways to think about reducing that payment:

  • Selling
    • If you live in a city like New York, where everything is walkable or accessible through public transportation the need for a car is slimmer. Think about how often you use/need a car and decide if going cold turkey is the right move for you. Selling would also give you an immediate influx of cash which you could put toward any investment or savings channel.
  • Downsizing
    • Do you have a gas guzzler? You could look at getting a new car that gets better gas mileage, or better for the environment like an electric car.
  • Other transportation
    • Look at all the modes of transportation available to you: walking, biking, taking the bus, train, or subway. Check out what your city has to offer and you might find that these alternative options are more convenient and cheaper.

3. If All Else Fails, DIY

There are many people that hold multiple jobs. Side hustles are trending now more than ever. So if you are strapped for cash, perhaps it is time for you to have one of your own. From artisan handcrafted goods, to design work, to selling some older possessions, you can find a way to make money that works for you.  

You may not be quitting your day-job, but working weekends at a local shop or contracting out some services could be a good way to help make you more money this year.

4. It Is All About You

Spending is personal. Your unique spending habits tell a story: the story of your habits, lifestyle, hobbies, and more.

What are some of your core values?

If you spend your money according to them, you will be more likely to stick to your budget. Sometimes we forget the emotional weight that money carries. Figure out how to best honor your values through your spending. When you factor in your needs and the needs of your loved ones, your budget becomes less of a hassle and more of a habit.

Try these 4 budgeting tricks in 2019 to see how you can actually stick to your budget this year!