Even the strongest budget needs to be revisited occasionally, particularly in a period of high inflation and rising interest rates.
Rising costs and inflation topped the list of why regional consumers are spending more (72%), according to a recent WSFS Bank Money Trends study.
Here are tips to help you revamp your budget and reach your financial goals.
Set Actionable Goals and Plot How You Will Achieve Them
The first place to start is to think through your goals, both short- and long-term, and how you will achieve them. The WSFS study found that of those in the region saving more this year, 40% cited having specific savings goals as the reason why.
When setting your goals, ensure they are specific and measurable so you can check your progress regularly and adjust where needed. For example, if your laptop is toward the end of its lifespan and needs replaced in the next year or two, research the cost of the replacement and then work backward on how you will save that much money.
Planning these larger purchases in advance can help keep you on track and provide the runway needed to build your savings.
Find a Budgeting Technique that Works for You
There are a variety of great budgeting systems, so it is important to do your research and find the one that works best for your financial situation and goals.
One popular budgeting method is the 50/30/20 rule, where 50% of your budget goes toward needs (housing, groceries), 30% goes toward wants (vacations, dining out) and the remaining 20% is devoted toward savings and paying down your debt.
Another method is opting to use your debit card versus a credit card. Among the regional respondents in the WSFS study who said they’re using their credit cards less, 31% said they are better able to stay on budget by doing so.
Whichever method you choose, it is always a good idea to keep a close eye on your online and mobile banking so you can see where your finances stand in near real-time and identify any fraudulent purchases.
Review Your Spending Regularly
According to the WSFS study, 38% in the region are spending more money now than last year, emphasizing the importance of reassessing your spending habits regularly.
Look at your online and mobile banking and bucket your purchases by type, such as essentials and entertainment, to identify areas where you can cut back. Many budgeting apps have this feature already built in. A few areas to look for cuts: buying store brand items, renegotiating prices for things like your cable, phone, internet and insurance, and cancelling unused memberships or subscriptions.
Separating the account used for your daily purchases from your savings account can also be helpful. If you find you’re saving more because of your spending habit adjustments, redirect that additional money to your savings through regularly scheduled transfers, or if you have debt, put it toward paying down the principle more quickly.
There are many budgeting systems and tips that consumers use successfully, but it is important to find one that works best for your unique situation. If you feel you need more assistance, consider scheduling an appointment with your local banker.
Helping you boost your financial intelligence.
Read our financial resources from your friends at WSFS.