If you want to retire with no more mortgage or other debts, budgeting is a critical skill you need to be proficient at.

A strong foundation for financial independence can be found in learning to budget skillfully. If you are like most folks, budgeting is not the first thing that comes to mind when deciding on how to spend your leisure time. But you’ll discover that it’s one of the most effective ways to get ahead financially if you stick with it.

You can also improve your retirement contributions, as well as pay your debt down more rapidly, by learning to budget well. You could find yourself free of debt and with no more mortgage payments years earlier than you expected by incorporating good budgeting practices into your financial plan. Budgeting can also make it easier to survive the surprising financial emergencies that can come up by building up an emergency savings fund.

If you use a budget now, or have tried to in the past, you know it can be a real challenge. Here are a few steps to help you stay with your budget and stay on track to the financial success you deserve.

Crack down on your wasted spending and save money right away:

Go through your current bank statement and write a description of what each amount of money was spent on. Next, add up the items that you really didn’t need. It’s also common to see that there are some items you bought that you wasted more money on than you thought. You may find that you spend too much money on things like going out with your friends or eating out for lunch.

Focus on building your savings for emergencies:

You should work towards building up adequate savings to handle an emergency that comes up, or a period of unemployment. The last thing you want to do is to have to use a credit card and pay interest on an expense you didn’t plan on or budget for. Use your budget to determine how much you could put into your savings every week or every month and get started.

Use cash with more awareness:

You want to use cash or a debit card instead of credit cards whenever possible. Avoid using your credit cards because they have a compounded interest rate. The interest that builds up can get away from you and could led to big trouble financially. You’re also better off not having a lot of cash on you since it’s easy to spend without realizing how much you have spent. Spending should be part of a plan and not something you do because you have money available. Use your debit card whenever possible as it’s easy to track and scrutinize your spending. Lastly, stop carrying your credit cards if you have difficulty not using them.

Eliminate bad habits:

Some of them cost you a lot more money than you notice, like your daily visit to the coffee shop, smoking, or going to the movies every weekend with your family. It’s easy to not keep track of your money and takes an effort to pay attention to your spending. You have to decide what’s important to you. Is it important to retire with no more mortgage or other debt payments? Ask yourself how you are going to get there. You can start by listing the habits you have that are wasting money and put an end to them. Little expenses add up over time, and some of your small habits that don’t seem like they cost much each week could cost you tens of thousands or more in retirement income in the future.

Share the responsibility with your family:

Everyone in your home should understand and have a part in budgeting and following the budget. Let everyone in your household know what you are trying to achieve so they are supportive and understand why they can’t spend more. Show them how they can help by not wasting, and by planning before spending. Sit down with your spouse and make a plan for your spending and budgeting. Then you’ll want to check in every week to make sure you are staying on track, or decide how to get back on track if you happen to stumble temporarily. Arguments and disagreements over money are among the leading causes of divorce. Sticking to your budget can help relieve stress and could minimize or even prevent financial strain from taking its toll on your marriage and your family.

Pay down your debt:

If you don’t have a plan for your debt you need to create one now and start following it absolutely faithfully. When you’re struggling with debt, you may feel like it’s going to take forever to pay it off, and it usually will take several years if you have a mortgage. Over the last few years, retirement accounts have taken big hits and fallen considerably in some sectors. The stock market has proven that it cannot be depended on. One of the only ways to get a guaranteed return on investment comes from paying off your debts and not having to pay the interest on them anymore. Every time you pay off a debt that improves your cash flow at the same time. But it often takes years and you need to have the discipline to follow through every month.

Re-examine your latest spending and expenditures:

You want to review your spending every month to see your budgeting progress and to check for other areas to improve on. Continue to critique your statements and receipts to look for more opportunities to cut your spending. Think about taking lunch with you to save more money. Set up a carpool with a buddy or someone you work with. Make little cuts where you can to increase the amount of money you have to save, or put toward paying down your debt. Sticking to a budget is critical to paying off your debts and having no more mortgage payments.

Budgeting is essential to getting a handle on your finances and building up the retirement you want and deserve.

P.S. – Watch our short 2 minute NO MORE Mortgage video to learn more about our program.

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