Budgeting strategies are helpful for families and individuals to build a solid financial foundation and net worth.
Below, Jason Kulpa, net worth expert and experienced serial entrepreneur, outlines tips to make your earnings stretch from paycheck to paycheck – and further.
- Determine your budget before the month even begins.
Before the month starts, determine the plan and designate each dollar received to a category. You don’t have to spend every dollar, but make a plan to allocate. Be realistic with your categories as well; the last thing you want to do is set yourself up for failure before you even begin.
- Focus on the essential categories first.
Prioritize budgeting for food, housing, utilities, and transportation to start. After essentials for living are covered, look to fund savings next. Only after those are covered can you budget for extras like shopping, entertainment, and travel.
- Create a category for unexpected expenses.
It’s essential to include a buffer for the unknown. Having a miscellaneous category can help you stay on track and avoid cutting back from another category when something happens. Watch what falls into the miscellaneous group each month to see if it is recurring and needs to be factored into your long-term budget.
- Plan for seasonal expenses.
A budget doesn’t have to be static for each month of the year. Some expenses–like school supplies, car maintenance, or taxes–can creep up without realizing it. Adjust the savings amount a few months before so that there is a little extra preserved when they hit. Or in months you have to spend a little extra in those categories, try cutting back on eating out or shopping.
- Eliminate high-interest debt.
If you have debt such as student loans, credit cards, or a mortgage, focus on the highest interest-bearing first. Once you pay off the first debt with the highest interest rate, take that payment you were making and apply those funds to the next highest interest-bearing account.
- It is okay to cut items from the budget temporarily
Don’t be afraid to cut back if things are tight or there is a specific goal in mind. There are usually areas you can cut back in–such as cable, dining out, or shopping. It’s important to remember that those don’t have to be permanent changes and can always be revisited.
- If you can’t stick to the budget, use cash.
If all else fails and you can’t stick to your budget, take it out in cash. Having that amount tangible and with you may help you stop and reevaluate before you make a purchase.
- Make it fun and real.
Give yourself and your family goals. Don’t budget for the sake of budgeting; have goals in sight. It can be hard to stay focused if you can’t remember why you are cutting back—remembering that future house or vacation you want to take can help you stay focused and motivated to keep saving.
About Jason Kulpa
Jason Kulpa is the Founder and former CEO of UE.co, San Diego’sFastest Growing Business multi-year award winner, and a Certified Great Place to Work multi-year winner. Under Mr. Kulpa’s leadership, in 2018, his teams volunteered at over 24 events and worked side-by-side to improve the San Diego community. They hosted a gala dinner benefiting individuals with autism, cheered on Special Olympic athletes as they broke their records on the track, and brought school supplies and cold-weather gear to students impacted by homelessness.