Budget Tips & Tricks

Jan 30 / Dr. Jay Zigmont, PhD, MBA, CFP®

While the thought of sitting down to create a budget may be overwhelming, the hardest part of that process may be pulling all your financial skeletons out of the closet and holding them up to the light. Your budget will organize your incoming and outgoing money for you, showing you where you might be overspending or undersaving. Then it'll be up to you to actually live with the budget and make adjustments to your life and spending accordingly. Remember, a budget doesn't just tell you what you can't spend, it also tells you what you can spend. So with that in mind, here are some tricks to employ and potential pitfalls to avoid, so you can stick to your budget.

Prepaid Debit Cards

One of my favorite budget tips is to use prepaid debit cards for your fun spending. You can buy these at the grocery store, Walmart, or really anywhere, and they can be refilled multiple times. This is a more modern way to use the envelope system for budgeting, which has gotten a resurgence in popularity thanks to social media. You'd withdraw cash for expenses and keep it in a series of envelopes for each part of your budget, and when you run out of money, you're done spending in that category.

If your spending vice is Amazon, for example, you can add a prepaid debit card (or even an Amazon gift card) to your account, and if you give yourself $100 per month to spend, once you've spent that, you won't be able to make any additional purchases. The legwork necessary for this system will also make it harder to mindlessly click "buy now."

Curbside Pickup

Some people struggle with impulse buys at the grocery store. It's very easy to deviate from your shopping list when you're surrounded by food items you've never tried before – and they're on sale, to boot! Grocery stores are designed to encourage us to overspend. This can really be a problem if you shop while hungry, too.

One way to sidestep overspending at the grocery store is to opt for curbside pickup, rather than going inside to select your items yourself. This can be done through a shopping app like Instacart, or maybe even through your grocery store's app. You'll have to go pick up the groceries (grocery delivery can be expensive and may not save you any money, even if you don't buy anything extra), but you can be confident that you'll receive what you ordered, and skip the temptation to pick up a bunch of new snack foods to try.

Watch Out for Warehouse Stores

Buying in bulk is a common recommendation to save money, and it can work for some people. You'll want to consider your situation and needs (if you live alone in a tiny apartment, do you even have space to store bulk purchases?) before taking the plunge. And also consider what you're buying and whether you can finish it before it spoils. You do want to be careful about bulk warehouse stores themselves, however.

Stores like Costco, BJ's, and Sam's Club sell more than just food and other essential purchases. You'll find automotive gear, electronics, jewelry, and more. You could go into Costco, grocery list in hand, and walk out having purchased a kayak. Some of these stores also sell alcohol, so you might fall into the trap of lumping your liquor purchases in with your grocery budget.

If you shop at these membership warehouse clubs, be sure that you're accounting for all the different types of spending you're doing there. Use your budget to build a structure around your spending, so all the money you have coming in and going out has a purpose.

Use Autopay for Monthly Bills

The more you can automate your finances, the easier it will be to stay on top of your bills and savings and investment goals. If you know your bills cost $3,000 per month, you can set up a separate bill-paying account, and put $3,000 into it. You set up autopay for the bills, and every month, add a little more than $3,000 to the account, setting up a cushion to ensure you have enough money to cover the bills without overdrafting the account, even if your income is less predictable.

Be Careful with Credit Cards

If you're a credit card user, be extremely careful – they can be budget busters. The reason for this is psychological. You can swipe a credit card without feeling the pain of parting with money. If you had to pay for a $100 expense with a physical $100 bill, you'd feel it. This is a much different feeling than just signing your name to authorize a $100 charge on a credit card.

Don't Get Carried Away Buying Gifts

Buying gifts is an area where a lot of people overspend. If someone only hangs out with you because you buy them things, they were likely not your friend to begin with. If you're going to buy gifts for others, plan for it and build it into your budget. And don't get into a gift-giving "arms race" where you're constantly trying to out-spend the other person.

Childfree people in particular are susceptible to financial bingo, where others assume that because we don't have kids, we have extra money to spend for family support or buying gifts for kids. Don't let yourself be guilted into this, as no one else gets to vote on what you can do with your money.

Ultimately, it's the thought (and love and care) that counts when it comes to gift-giving. Plan for big occasions like the winter holidays, and try to put aside money every month if you know you're going to be spending a lot in December buying gifts for others. Another technique to try is setting a price limit (maybe $25 or $50) per person for family gift exchanges. You might also have a white elephant exchange, where the participants trade silly or impractical gifts. This turns a holiday gathering into more of a party, and it can be a lot of fun.

Try Not to Repeat the Same Mistakes

These tips can all help you manage your spending and stick to your budget. Remember, this is a process, and ideally, you're improving month after month. If you make the same spending mistake two months in a row, it's a sign that your system needs to be changed.

Jay Zigmont, PhD, MBA, CFP® is the Founder of Childfree Wealth®, a life and financial planning firm dedicated to helping Childfree and Permanently Childless people. Dr. Jay is a CERTIFIED FINANCIAL PLANNER™, Childfree Wealth Specialist, and author of the book “Portraits of Childfree Wealth.” Dr. Jay is the co-host of Childfree Wealth Podcast. His Ph.D. is in Adult Learning from the University of Connecticut.

He has been featured in Fortune, Forbes, MarketWatch, Wall Street Journal, New York Times, Business Insider, CNBC, and many other publications.