Do you feel like your spending is out of control? It’s a common experience. It can be easy to blow your budget when you succumb to the allure of some shiny new thing (like the latest mobile phone), have an unexpected expense (a car repair, for instance), or say yes to a weekend away with friends when you don’t really have the cash. Whether you’re struggling to stick to a budget or want to be more organized with your money, there’s never a wrong time to get your finances back on track.
Many of us can respond quickly in the one-off, urgent money crisis. It’s akin to going on a crash diet prior to a big event. But if you are regularly feeling strapped for cash and as if you can’t get your money act together, it’s time for a fresh look.
Making permanent lifestyle changes requires time, dedication, and training in new skills. By applying this perspective to budgeting, you’ll be able to diagnose the problems and practice new habits. That can help show you how you can get back on track financially.
Here, you’ll learn:
• Why it’s so difficult to stick to a budget?
• Why you typically go off your budget?
• Ways to stick to a budget.
Why Is It So Hard to Stick to Money Goals?
Even when we create a monthly budget with the best intentions, we might get off track along the way. Life can be expensive! Whether it’s an emergency medical bill or a seemingly irresistible sale, obstacles pop up with regularity for anyone trying to control their finances.
Additionally, establishing new habits is always a challenge. For example, discipline is vital to eat out less or reduce other expenses. It’s easy to slip back into something familiar and comfortable, even if it hurts your wallet.
Remember, too, that everyone is dealing with a pandemic and inflation. The average American household is spending more on necessities like food and fuel. That takes a bite out of your budget. And, as pandemic restrictions lift, many of us want to get back to doing things like going to concerts and traveling. Those can be pricey to begin with, and inflation just intensifies how such expenses can impact your budget.
Recommended: How to Protect Your Money from Inflation
Common Reasons Why People Break Their Budget
Many factors can cause a budget to go sideways. Here are some other common reasons why people break their budgets.
• An unexpected bill, like a car repair or emergency room bill
• The budget felt too stringent and was abandoned after one splurge purchase
• Your income fluctuate too much for a budget to account for, whether that’s because you are a freelance worker or were laid off recently
• The temptation of a sale, peer pressure, or shopping to satisfy one’s emotions
Tips for Recovering and Getting Back on Track With Your Finances
Even folks who closely track their spending go over their budget now and then. It happens, but diverging from your budget isn’t the main issue — how you recover is more important. So, if you’re wondering how to start getting your finances back on track, these strategies can help speed up the process.
Evaluating and Pinpointing the Damages
You’re not alone if you get to the end of the month wondering where all your money went. When faced with unexpected expenses, most families will experience financial hardship. According to the Federal Reserve, roughly 35% of Americans would struggle to pay $400 in unexpected expenses. That means many of us don’t have emergency funds in place, or at least not adequate ones.
Overspending can mount quickly, putting any budget out of balance. A few additions to the grocery cart, a few extra visits to the coffee shop, or a home repair can wreak havoc on the most carefully planned budget.
For this reason, looking at recent bills and credit card statements can help identify where you spent your money. For example, dinner with your friends at your favorite (and somewhat pricey) restaurant or back-to-school shopping for your children may have thrown off your spending plan. Identifying budget lapses can help you plan for or avoid them in the future.
Adjusting Your Budget Numbers and Goals
Conventional budgeting advises that you look at your expenses at the end of each month. However, reviewing your account balances and statements once a week is more advantageous for keeping track of money coming in and going out. A weekly check-in allows you the time to change course and maintain your budget, even if the first week of the month didn’t do your budget any favors.
You might have zero experience with budgeting, and that’s okay. However, creating a budget for beginners is an excellent way to start working on getting your finances on track. Watching your cash flow can help you tweak your budget to better suit real life.
Being Kind to Yourself
Don’t beat yourself up if you make your budget with the best intentions and fall woefully short the first month. Progress is more realistic than perfection. Moreover, someone trying to build a new skill rarely gets it right the first time.
Cut yourself some slack if you’re months into following a budget and realize you overindulged this week. Your budget is there as a guide, so update it if you see the need and realign your spending the following month. Practice some financial selfcare and get back on track.
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Finding a Financial Accountability Partner
Reaching out for help is an effective way to stay disciplined. A financial coach or financial therapist can play a positive role in modifying your spending habits. In addition, spending issues may be rooted in an unhealthy relationship with money. Finding someone who provides accountability and encouragement can be a real support as you learn smarter cash management. It can be the difference between managing your finances successfully and giving up just when you start to get serious.
Even seasoned budgeters can benefit from professional help. Those with budgeting down pat can work with a financial advisor to create a financial plan and achieve their goals, whether that’s building up an even bigger emergency fund or investing for retirement.
Recommended: Are you financially healthy? Take this 2 minute quiz.💊
Identifying a Budgeting Method for Your Needs
Another strategy to get back on track financially is to pinpoint a budgeting method. There is no one-size-fits-all budgeting solution since everyone has a unique financial situation and personality type. So, here are a few common methods to explore.
• 50/30/20 budget. The 50/30/20 budgeting rule requires budgeters to spend 50% of their income on needs (mortgage, insurance, and car payments), 30% on wants (entertainment, shopping, and personal care items), 20% on savings (investments and emergency fund contributions).
• Envelope budget. With this method, you divide your spending categories into cash envelopes with a certain amount of cash in each. When the envelope runs out, you can no longer spend in the category until the next month or else you can take money from another envelope.
• Zero-sum budget. This method requires that you give each dollar you have coming in a job or specific purpose. Therefore, at the end of the month, you will have zero dollars left over.
• Paying yourself first. With this method, you pay yourself first before you pay other expenses. So, if you plan on saving 20% of your income, you put that away before using the rest of your income as you wish.
• Line item budget. Usually, when people think of budgeting, a line item budget is the technique that comes to mind. With this method, you place your income and expenses on an Excel spreadsheet to track all the money you have coming in and going out. You learn and adjust as you go.
The Takeaway
If only sticking to a budget were a straightforward and effortless process. But the truth is, many of us lose our focus, have fun spending our hard-earned money, or encounter emergencies and blow our budgets. However, you can get back on track. You may need to diligently track your spending, keep a positive perspective, employ some new strategies, and connect with experts for additional ideas. But by investing some time and energy, you can learn how to get your finances back on track.
A SoFi bank account can help you streamline your budgeting efforts. Not only does our Checking and Savings offer automatic saving features, you’ll also enjoy features that can help your money grow faster. For instance, sign up with direct deposit and you’ll enjoy a fantastic APY and pay no account fees.
FAQ
What is the easiest way to track finances?
Budgeting apps that track your spending can help you understand your finances down to the last detail. For example, you can integrate your credit and debit cards, bank accounts, and investment accounts into one app that provides spending alerts and expense reports.
How can I straighten out my finances?
Some solutions for getting your finances straightened out include making and following a realistic budget, regularly checking your credit reports and scores, and automating transfers to savings and investment accounts. This way, you can begin building good monthly spending habits.
How can I grow financially?
Some strategies for growing your money include using cash instead of credit, avoiding debt, paying bills on time, and eating more meals at home. Look for a financial institution that pays high interest and doesn’t charge fees (it’s likely to be an online bank). Then, apply your savings to investment accounts such as an IRA or employer-sponsored 401(k), which will grow your money over time.
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SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 8/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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