5 budgeting hacks I learned from a friend that help me save an extra $1,000 a month

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• I've always struggled with budgeting. I try different tactics but always abandon them fast.
• But a conversation with a friend turned things around for me, and now I'm saving more than ever.
• She taught me how to build a budget that's realistic, flexible, and helps me achieve my goals.

For most of my life, the idea of setting and sticking to a budget seemed impossible. I'd make a draft of how much I wanted to spend for the month ahead, have a loose plan, and end up forgetting about the budget a few days later.

One of my biggest goals for this year was to get over that bad habit and take budgeting more seriously. I researched other people's best tricks and tips (like using a budget worksheet, putting money in envelopes for the month, and paying for things with just cash), but I found myself still wary that any of those approaches would stick with me.

I brought this up to a friend of mine, who is a mother of three kids and prides herself on being true to her budget. She sat me down, showed me her process, and sent me away with five techniques that I've put into place. The result? I've stayed on budget every month this year and even found ways to save an extra $1,000 a month. Here's what has worked for me, inspired by that friend's worthwhile advice.

1. Be realistic

One of the biggest mistakes I routinely made when I tried to budget was vowing to spend a certain amount each month, which just was not realistic. It was always at least 25% less than what I had spent in the months before.

Rather than try to fix two habits (overspending and not sticking to a budget), my friend taught me to pick one goal at a time. Setting a budget that is in line with your current spending is a good way to get on track and organized. After that, you can adjust the budget to reduce spending in certain categories to help you save more.

I not only did that, but I also made sure to plan my budget around what I knew would pop up that month. Every single month, the amount I budget to spend varies. Some months, I spend more and save less, and others, I do the reverse.

2. Update it regularly

The art of creating a budget is not only a process, it's also something that can be super time-consuming. Even if you use someone else's budget worksheet, you still have to adjust categories based on what applies to you and also audit your spending so you know how to make the plan personalized for you.

Once I put in the hard work there, I usually found that I abandoned the budget a few days later.

Instead, updating my budget and tracking my spending has now become a daily practice. Every night, after dinner, I sit down with my Excel spreadsheet, write down what I spent that day, and soak in how my spending for the month is looking. This helps me be more aware and in tune with what's going on financially and not get surprised or shocked at the end of the week by any purchases I didn't plan properly for.

3. It's OK to move money around

I always thought the secret to staying on budget was making sure you stayed very strict. According to my friend, the opposite is true. It's OK to look at your spending week by week and see what categories need to be adjusted.

Let's say you overspend in your dining category, but you have been underspending in your clothing category. You can move money from one category to the other.

I sit down every Sunday and move allocated money around based on my spending needs for that month. The lesson: Stay strict with the amount you've budgeted for that month, but be more casual about where exactly that money is going.

4. Plan for unexpected expenses

I never had an emergency category in my budget, so whenever something happened that I didn't plan for (a health bill, a home repair, etc.), I would get frustrated and abandon the budget. While we can't predict what might happen during the month, putting aside a few hundred dollars for any pop-up or last-minute expenses can help you stay true to your budget.

Since I've been doing that, I feel less pressure and anxiety if something happens that I didn't plan for. I just pull the money from that emergency category and supplement the rest of that expense from my general emergency fund.

5. Learn to say no

Having a budget allows you to know how much you can spend that month on everything from groceries to activities with friends. Having this sort of structure has allowed me to know in advance what I can say yes to and what I have to decline.

It's made it much easier for me to say no to things in advance (whether events, happy hours, or weekend travel). If I didn't put it in and can't make it work that month by cutting back spending in other categories, it's a no. This has helped me save money throughout the year and not give into extra expenses that are "nice to have" but not must-haves.

This article was originally published in September 2021.