The importance of budgeting is widely known, but not often put into practice. In fact, across the country, over 55% of surveyed Americans say they don’t budget at all. Among the top reasons why adults said they don’t budget is because they think it won’t work for them. But budgets not helping is the exception, not the rule.
When budgets are designed carefully and practiced mindfully, they not only help you get by, they help you thrive. Rather than simply using your budget to make cut-and-dried payments, here are some ways that your budget can bring you instant and long-term benefits.
Factor in investments
A budget that works today is good, but a budget that secures your tomorrow is even better. As such, one of the best ways you can optimize your budget is to factor in investments. After all, when you’re investing, you’re making every cent work and grow in your favor. However, since not everybody has the money for large-scale investments, the better approach is to start small and start early. As explained in Maryville University’s blog post on investment tips, you can turn minor sums into major gains by accruing compound interest at a younger age. Ideally, as soon as you start earning, you can start budgeting your investments. Consider that by simply investing the equivalent of $6 per day at age 18, you could have $1 million by age 82. Some of the best “modest” investments you can budget for include index funds or IRA accounts. With these low-risk options, you can safely grow your assets and your future budget.
Prioritize debt management
From mortgages to student loans, the average adult in 2021 had over $90,000 in debt. Nationwide, CNBC’s report on household debt reveals that this makes the average family’s debt swell to nearly $156,000. If left untouched, the interest in these debts can grow — potentially leading to large fines and interest payments that eat up any money you have left. To avoid this, it’s important to include debt management in your budget. Understandably, paying off what you owe may seem like it’s only shrinking your budget, but this is only temporary. The more consistently you pay off your debt, the sooner you can complete your payments. That said, you don’t have to pay off all your debt too aggressively. Instead, consider a slow but steady approach that ensures your budget for other needs won’t be compromised.
Maximize your cashback
Shopping and getting money back almost sounds too good to be true. Thankfully, cashback is very real and something that you should be taking advantage of. As described in our article on “5 Helpful Money Saving Tips”, cashback tools offer a safe and rewarding way to shop. To maximize your cashback, try to find opportunities to earn cashback from multiple sources. For example, you can find a credit card that offers cashback rewards for certain purchases, and on top of that, use a browser extension like Sleek. Sleek is a free browser extension that helps you earn cashback every time you shop online. The best part? The cashback you earn from Sleek comes on top of what you’re already getting from your credit card. It’s a great way to ensure that you receive some of your hard-earned cash back with every transaction. Once you start maximizing cashback, your budget will stretch out longer as you save more and more money.
If your budget never seems to be enough, then maybe there’s too much riding on it. Though we often like to paint ourselves as frugal, chances are that most of us are overspenders. According to the University of British Columbia’s academic assessment of overspending, money matters are not as objective as we’d like them to be. In reality, spending and budgeting is deeply emotional. It’s easy for us to lose control and spend on things that we don’t need but that instead fill a psychological need. For instance, does your daily morning coffee really have to come from that pricey cafe? Or, is that extra jacket really necessary in your wardrobe? Asking and answering these questions doesn’t mean you have to deprive yourself. Instead, it’s about knowing when to draw the line between short-term satisfaction and indulgences or long-term financial stability.Budgeting is different for everyone. What’s essential is that it’s approached with creativity, proactivity, and awareness. When that happens, your budget will last longer and you’ll see more meaningful benefits in the long run.
Written exclusively for Sleek by Amber Cross