At Acima, we want our customers to feel empowered to take control of their finances. One of the best ways you can do that is by creating a budget. Of course you’ve heard about the almighty “budget.” It’s a buzzword that gets thrown around a lot — especially in times of economic insecurity. But what is a budget, exactly? Does it just mean spending less? Is there more involved?

At its simplest, a budget is basically a summary that compares and tracks your income and expenses for a defined period. There are all sorts of budgets, and you can tailor them to your needs. You can budget for a week, a month, a quarter, a year or even longer!

When some people hear the word “budgeting,” they begin to get stressed out. They think it means they won’t be able to enjoy the activities or meals they love anymore. They associate budgets with being stingy and having to give up fun things. But it doesn’t have to be that way! Used correctly, a budget is simply a tool to help you take control of your finances and achieve your financial goals, whatever those goals are.

You can make your way into a brighter financial future, and we’ve rounded up our five favorite personal budgeting tips to help you get there. Following our three easy steps for creating — and sticking to — a budget can help teach you how to plan and account for some of life’s big-ticket shopping choices, such as furniture, appliances, electronics and more!

Personal Budgeting Tips

Every individual and family is different, so no two budgets will look exactly the same. However, there are some general rules of thumb that will apply to you as you consider your finances and goals.

1. Learn your habits

You can’t make a budget unless you first understand where your money is going. So, if you’ve never budgeted before, an important first step is to begin to pay careful attention to your spending habits. Keep your receipts and calculate your expenses within a defined period (say, a week or a month). If you’re just starting out, we generally think it’s best to start with a monthly view.

Next, organize your expenses into categories. Some of these categories might include:

● Rent/mortgage

● Utilities

● Groceries

● Car payments

● Insurance

● Child care

● Transportation costs

● Student loans

● Savings

● Utilities

Hot tip: Instead of writing down every single item you get, use bank statements and credit card statements from the last three months to identify where your money is going. When you pay cash, carry a small envelope or a reserve a pocket in your wallet for the receipts.1

Once you have a better understanding of where you’re spending your money and how much you’re spending within each category, you can then set a budget for each category. You might decide you can spend a little less in some areas, or you might realize the coming months might require a bit more. Then, once you’ve decided how much to allocate for each category…

2. Write it down

A budget only serves you well if you respect your budget. The goal here is to make it a part of your everyday thinking and spending habits. What you don’t want is a few loose numbers floating around in your head, as you try to make calculations on the fly, in an attempt to avoid surpassing your limit each month. Let’s be honest: In today’s hectic world, you’re probably not even going to remember all your limits, much less every single item you shopped for in a month!

So, it’s always best to write down where your money is going. Whether you’re using an app to keep track of your expenses digitally, creating a spreadsheet or even using the old-fashioned pen-and-paper method (it works!), writing down your category limits and all of your expenses helps you remain accountable to yourself and further understand where your money is going. Tracking your expenses will also help you understand how you can utilize your money better. For instance, once you’ve written an amount down somewhere on paper, you may realize you’re spending way too much on fast food and restaurants. This might prompt you to plan ahead and cook at home more, and pretty soon you’ll be seeing the amounts in your accounts stabilize.

3. Don’t cheat

All too often, people think they can outsmart the budgets they’ve set for themselves. Especially in the early days of working with a budget, it’s easy to think you don’t need to write down that gas station run you made during your break — you only bought a candy bar! Or maybe you think you can ignore the cost of that lunch with co-workers, just this once, because you all pitched in.

Don’t think like this! These kinds of “small” oversights can quickly have a HUGE impact on your budget, causing it to lose all of its importance. Every expense, whether it seems big or small, is still an expense at the end of the day, and each dollar spent should still be part of your budget. So, don’t fall into the habit of letting things slide — or worse, paying for something with a credit card because you’ve surpassed your monthly allowance. That’s how you can find yourself in debt. Instead, keep track of every single expense, no matter how small or infrequent. Not only will this make it more likely that your budget will succeed, but it will help you establish healthy habits around the way you spend money. If you’re tracking everything, you won’t hit the end of the month and wonder, “Where did all my money go?” or, “Why is my credit card balance so high?”

4. Adjust your budget as necessary

Life is always changing, and so should your budget. Your first budget should never be your last. Of course, you’ll want to make adjustments if you change jobs, get a raise, have a child, plan on moving, and for any other big life events that take place. At the same time, you may realize you’re doing a really great job at adhering to your budget — so good, in fact, that each month you have some money left over. For example, you might notice that you’ve been cooking at home quite a bit, and you haven’t been spending as much on dining out. If that’s the case, go ahead and shift that extra monthly allotment to a different section, like entertainment or car payments, or any other category that’s in need of more funds. Here’s another example: If you’ve just completed a car payment, you can now shift that monthly budgeted money to something else. Or instead, why not treat yourself to celebrate your success! Maybe you can start saving the money you were spending on the car payment, and finally take that trip to Hawaii that you’ve always wanted.

Budgeting is also a learning process, so learn as you go. Find what works for you and your lifestyle. As long as you’re staying true to budget, how you divide out each line-item allocation can depend on what your priorities are. However, we do recommend making sure all your basic needs are met — that your loans are paid off, and you’re contributing to savings before budgeting for things like entertainment, dining out and travel. As a general rule, experts recommend using 50% of your take-home pay on needs, 30% for wants and 20% for savings.2

5. Have an “oops” fund

A budget should be strict. Otherwise you’re not being accountable to yourself, and your finances may spiral out of control. When that happens, you might end up in debt and have to pay for things with a credit card — which, of course, only leads to more debt. However, a budget should also be realistic. Emergencies happen: Roofs leak, cars break down, family members get sick. That’s why, if possible, it’s a good idea to build some wiggle room into your budget. Allocating funds for emergencies in a separate section of your account allows you to save a little while remaining strict on the other categories in your budget. And don’t be afraid to use the emergency fund when the need arises! But only when the need arises. A good rule of thumb is to have anywhere from three to six months’ worth of expenses set aside for your emergency fund.3

Conclusion

Budgeting is hard work, but the results can be immense, even life-changing. Once you understand where your money is going and commit to being accountable to yourself, your budget will help you to achieve your financial goals.

At Acima, we understand the power of a budget. In fact, we’ve built our lease-to-own* model around this very idea. With our alternative to financing, you don’t have to overspend to get the things you need, and you won’t need to resort to credit cards. Instead, with a lease-purchase application, you can shop for the things you need and make manageable lease renewal payments as you work toward ownership. If you make the number of payments defined under your lease or exercise an option to purchase it early at a discount, it’s yours! If you no longer need it, you can simply return it in good condition at any time without further obligation. This means you can stay on budget, while getting the name-brand furniture, electronics, appliances and more that you’d like. Discover the shopping power that Acima leasing can provide, and enjoy how it benefits your budget.