8 budget tips for staying within your means

Links to external websites are not managed by Varo Bank, N.A. Member FDIC.

All Varo products and services mentioned below are contingent on opening a Varo Bank Account. Qualifications may apply.

There’s no overemphasizing the importance of creating and sticking to a budget when it comes to building long term financial security. Having a budget doesn’t just help you stay within your means, it can also help you improve overall spending habits, prepare for emergencies, and focus on long-term financial goals, including retirement.

Budgeting may seem like a lot of work, but it doesn’t have to be. Check out this list of easy-to-implement budget tips, and determine what works best for you.

1. Reframe your thinking

For some, the word “budget” can create the same reaction as hearing the word “diet”.

Although the point of budgeting is to spend and save responsibly, it can often make us feel like we’re coming up short, especially if it’s uncharted territory.

So let’s rename it. Call it your spending plan. Sometimes just a simple word can change your mindset when it comes to healthy spending and saving habits.

2. Know what you can spend

Make your spending plan simple. Figure out how much you need for bills and expenses, how much to save, and, of course, how much for fun (everyone deserves to let loose and enjoy the fruits of their labor from time to time).

To determine that number, total up your monthly income, then subtract your rent or mortgage, loans or credit cards, utilities, and food or household supplies. The remainder is what you’re working with.

If you have some extra cash each month, it’s good to set aside money for an emergency fund or long-term savings. Need some help reaching your savings goals faster? A high yield Varo Savings Account offers no fees and easy auto-saving tools to help grow your money.

Once you’ve settled on how much you’ll need for expenses and savings, whatever you have left is what you’re working with for fun and entertainment (this can be anything like a night out, a vacation or concert, or even just shopping for that new outfit you’ve had your eye on).

Creating and sticking to a spending plan can supply you with the confidence of knowing just where your money’s going and exactly how much you can spend.

3. Try the envelope method

Tired of spreadsheets? If you’re looking for an easy way to track your spending, try the envelope method.

Take a hard look at the items and activities that tend to make you go over budget most (groceries, restaurants, gas, gifts, etc.). Make an envelope for each and put the amount of cash you want to spend each month into it.

When it’s time to spend, grab the envelope labeled for the item or activity and pay with the cash you’ve set aside for it.

At the end of the month, see how you did—if the envelope is empty, you’re overspending. If not, give yourself a pat on the back and either save or apply those funds elsewhere.

4. Get a budgeting app…

Envelopes slightly too retro for you? Nowadays, there are a variety of apps for tracking spending available right from your phone. Most apps will need to connect to your bank account and credit cards to track your spending.

If there’s a  specific category where you typically overspend, set up push notifications to let you know when you’re reaching your limit in this area. Even that little alert can be a helpful reminder that you might not need that Amazon cart full of random items or that fancy dinner out.

5. …and use it

Setting up the app is the easy part. The tricky part is actually making sure you’re using it.

Regularly check your spending app at least every 2 weeks. You might be surprised at some of your spending trends once they’re all added up. For example, if you’re spending $100 a month on Starbucks, it might be time to start brewing coffee at home and grabbing Starbucks as a once-a-week treat instead.

6. Be honest

Keeping yourself honest is key when it comes to healthy spending habits. No matter how you approach spending, planning ahead to see where your money goes can help you make smarter choices about the things you actually need vs. want.

Hold yourself accountable to where your extra money is going, and regularly make a list of the areas where you can curb spending. If online shopping is your kryptonite, unsubscribe to marketing emails and set up an ad blocker in your browser. 

Practice owning less while and making use of what you already have. Although most of us crave the short-term thrill of spending, sometimes the items we purchase that made us happy at first can fall quickly into disuse. Focus on buying only what you need (and be very critical about the definition of “need”).

7. Make peer pressure your ally

Accountability can be a game-changer when it comes to cutting unnecessary spending and saving money. Find a friend or family member who’s in the same boat and wants to save alongside you. Check in with each other regularly to stay on top of your spending. 

Having someone else to report back to regularly can provide a big dose of motivation, especially if you can both celebrate your newfound healthy spending habits and savings together.

8. Make your money goals achievable

If you’re serious about improving your spending habits, it’s probably because you have a financial goal in mind. Setting goals for yourself can help you separate them into smaller, more manageable pieces, as well as keep the endgame you’re striving toward top of mind.

For instance, making a goal to pocket $100 each week is easier than saying you’ll have $4,800 in the bank in a year. Having an achievable goal in mind can help you stay the course and avoid spending on things you don’t need (or even really want). 

There’s no one-size-fits all approach to healthy spending. The trick is to mix and match the methods that you find work best for you. Remember, creating and sticking to a spending plan won’t just help ease your mind in the short term, it will help set you up for greater financial stability and empower you to meet your long-term savings goals.

Unless otherwise noted above, opinions, advice, services, or other information or content expressed or contributed by customers or non-Varo contributors do not necessarily state or reflect those of Varo Bank, N.A. Member FDIC (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s) other than Varo.