Sticking to a budget is not the funnest activity, especially when you’re not exactly a millionaire. That said, there are many ways to go about it even when you’re making an average salary — without the need for penny-pinching.
“Managing your finances effectively is crucial for financial stability and future security, especially when you earn an average income,” said Adam Garcia, financial consultant and CEO of The Stock Dork.
However, he added that sticking to a budget can be challenging. It requires discipline and careful planning to make it work.
“Establishing clear financial goals should be the first step in your financial journey,” Garcia explained. “You need to set specific financial objectives that motivate you to stick to your budget.”
Here are some expert-backed ways to set you up for success.
Cut Back On Unnecessary Expenses
One of the best ways to stick to your budget and save money is by cutting back on unnecessary expenses, said Linda Chavez, founder and CEO of Seniors Life Insurance Finder.
“If you earn an average income,” she said, “it’s important to prioritize your spending and only purchase things that are necessary.”
This means limiting eating out, going to expensive events or buying luxury items. Instead, try finding more affordable options like cooking at home, attending free events or buying secondhand items.
Developing the habit of pausing and thinking before making non-essential purchases is essential in managing your finances, Garcia said: “You should ask yourself if the item is a want or a need and whether it aligns with your financial goals.”
Create a Budget Plan
Another important step in sticking to your budget, according to Chavez, is creating a budget plan and sticking to it. This involves tracking your income and expenses, setting saving goals and making a monthly budget that fits within your income.
“It’s important to be honest with yourself about your spending habits and make adjustments if needed,” she explained. “Remember, a budget is only effective if you follow it consistently.”
Garcia also recommends sitting down and creating a comprehensive budget for managing your finances: “You should start by tracking your income and expenses over a few months to understand your spending patterns.”
With this data, he said, you can create a detailed budget that categorizes your expenditures.
“Ensure that your budget covers all essential categories like housing, food, transportation and healthcare,” he said. “Don’t forget to allocate a portion for savings and investments.”
Make a Needs List
Thomas Franklin, finance expert and CEO of BitInvestor, said it’s crucial to distinguish needs from wants in a fixed average income.
“If possible, begin working on this ‘needs’ budget in January,” he said. “It will help you to see the entire year at a glance and plan accordingly. Personally, I prefer to sit down and write a list of things I’m sure we’ll need. This list gives me an idea of what I should include in the budget and where each of these items should be addressed.”
If you know what your requirements are, he added, you can be proactive in determining how to meet them ahead of time.
Avoid Using Credit Cards
Credit cards can be tempting when you want to buy something that is not in your budget, Chavez said. However, using credit cards often leads to overspending and accumulating debt.
If you earn an average income, she said, it’s important to avoid relying on credit cards and use them only for emergencies. Instead, she recommends trying to use cash or a debit card for your purchases to help you avoid overspending.
Have a Debt Management Strategy
If you have debt, you should pay it off as soon as possible, experts say.
“Every little bit counts toward paying off the debt faster,” Franklin explained.
If you have bills such as a mortgage, credit cards, auto payments, student loans and so on, he suggests attempting to make extra payments on your smallest account first. As you pay off one bill, roll the money into the next, and so on until you’re completely debt free.
“To get ahead and remain ahead of the financial game,” he said, “make a plan for your debt while creating your budget.”
Increase Your Income
“If you’re struggling to stick to your budget with an average income, it may be helpful to look for ways to increase your income,” Chavez emphasized.
This can include taking on a part-time job, freelancing or finding ways to earn passive income.
“By increasing your income,” Chavez said, “you can have more flexibility in your budget and potentially save more money for the future.”
Seeking additional income is another way of improving your financial situation, according to Garcia.
“If your budget is particularly tight, explore opportunities to increase your income,” Garcia said. “Every extra dollar earned can make a significant difference in your financial stability.”
According to experts, no matter how much you earn, it’s important to prioritize savings. Setting aside a portion of your income each month for savings can help create a safety net for unexpected expenses and financial stability in the long run.
“If you’re finding it difficult to save,” Chavez said, “try setting up automatic transfers from your checking account to a savings account each month.”
Garcia agrees, noting that building an emergency fund is crucial in preparing for unexpected expenses.
“You should aim to save at least three to six months’ worth of living expenses in an easily accessible account,” he said. “Having this cushion will prevent you from dipping into your savings or using credit cards in emergencies.”
Garcia also recommends taking advantage of automated savings as an effective way of ensuring consistent savings.
“You can make saving a non-negotiable part of your budget by setting up automatic transfers to a savings or investment account,” Garcia said. “This will ensure that you consistently put money aside without the temptation to spend it elsewhere.”
Monitor Your Money
Regularly reviewing and adjusting your budget is an important part of managing your finances.
“Life circumstances change, and your budget should adapt accordingly,” said Garcia, who recommends periodically reviewing your financial plan to accommodate any fluctuations in income or expenses. “Being flexible and adaptable will help you stay on track.”
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