Budgeting can be a headache. But it’s worth it in the long run. Budgeting requires dedication and patience. I will help you plan your budget, understand how to make money work for you, and save for the things that are important to you.
Benefits of Budgeting
A budget is how you plan to save or spend money over a given period of time. Everyone can use a budget, whether you’re single or married, rich or poor, a student or the head of a corporation.
The benefits of budgeting are numerous, but here are some of the most important ones:
- Budgeting helps you stay out of debt by making sure that your expenses do not exceed your income.
- It helps you save for future purchases by setting aside a certain amount each month for savings, retirement, and emergencies.
- Budgeting helps you plan for big purchases like a car or home by spreading out the cost over time so that
Getting the hang of budgeting can take a bit of time, but you’ll be glad you did when all of your bills are paid on time, and you have money set aside for important purchases and fun.
Budgeting techniques can help you live comfortably within your means by ensuring that you have funds available for emergencies, unexpected bills, and even some extra fun. With the right budgeting techniques, you can spend your money confidently and smartly, track where it goes.
Ready to start budgeting?
Here are some steps to get you started and some links to help you improve your personal finance skills:
1. Don't make things complicated
When you first start creating a budget, try to keep it simple. If your budget is too complicated, you won’t stick with it.
Write down all of your expenses, along with the date and amount you paid. Subtract that number from your total income for the month, and you’ll get a good idea of how much cash you have left over.
This will help you figure out what you need to spend to live comfortably, and any areas where you might be able to save.
To get started, you can use the 50-30-20 budgeting rule, which is popularized by Senator Elizabeth Warren.
The 50/30/20 rule is where you allocate your budget accordingly:
- Spend about 50% of your net income on your basic needs (i.e. rent, groceries, utilities, etc.)
- 30% is allocated to your wants (i.e. dinners out, movies and travel)
- 20% is allocated to savings and debts repayment (investments, credit card payments, emergency fund deposits, loans, etc.)
2. Track your finances
It’s essential to write that budget !
Whether you want to use a budgeting spreadsheet on excel, or use pen to paper by writing it down in a notebook, or use a budgeting pdf template – there are tons of ways to do it! Between the budgeting apps that exist nowadays to all the great resources online, you’ve got options. What’s important here is that you keep track of your budget by creating an actual plan that you can refer back to.
Here a few templates and apps to record your budget
Mint, the most popular one
Mint, the free money manager and financial tracker app from Intuit, is the best budgeting app available today. It includes almost everything users need to manage their finances in one place: budgeting, checking accounts, investments, debt paydowns and more.
Mint organizes your credit card, bank account, and cash transactions, and helps you budget for your future. Create a budget, get alerts when you go over budget, and track your spending by category.
Goodbudget is an intuitive budgeting app.
Goodbudget is a budgeting app that helps you stick to a spending plan, by letting you pre-determine how much of your monthly income goes toward specific categories of expenses. Unlike other budgeting apps, Goodbudget doesn’t connect to your bank accounts. Instead, it lets you manually enter account balances as well as cash amounts, debts and income.
Goodbudget offers a free version with limited features and a paid version that costs $7 per month or $60 per year.
YNAB, your budgeting buddy
YNAB (You Need A Budget) is budgeting software to help users plan their finances, rather than track historical spending. The app follows the zero-based budgeting method, which requires you to make a plan for every dollar you earn.
As soon as you get your paycheck, YNAB will help you decide how much to allocate to various categories, such as saving for retirement or paying for car repairs.This way, you won’t be tempted to spend money that you don’t have.
YNAB lets you connect all your financial accounts, including credit cards and loans. There’s a free trial for 34 days; if you love it, use the annual subscription model. Students get a year-long free trial, as well.
Honeydue for budgeting with your significant other
Honeydue is a financial planner that allows you and your partner to share bank accounts, credit cards and loans.
Budgeting app Honeydue automatically sorts expenses into categories. But you can customize these categories, as well as create a monthly limit for each one. In case you or your partner breaks the budget, the app will email you an alert.
Honeydue is a free app that reminds you of upcoming bills and lets you text and emojis.
EveryDollar for simpler budgeting
EveryDollar is free, easy-to-use software that helps you manage your budget. In the free version, you manually enter transactions. You can also make manual reminders for bill payments and categorize expenses in a few clicks.
If you register for the online service Ramsey+, you can link your bank accounts and track transactions with a simple click. After a free trial, you can pay $59.99 for three months, $99.99 for six months or $129.99 for 12 months.
Wallet app , My personal choice
Wallet is a great app for tracking your spending. Wallet makes it easy to see what you’re spending money on and to adjust your spending habits. This app allows you to sync all of your financial accounts into one place, so you can easily see a list of the transactions that appear in each account. By customizing which categories you use, you can track spending more closely and make good financial decisions.
Wallet’s free version serves as a manual budgeting app, with one-tap expense logging and no data syncing. If you want automatic expense tracking, you’ll need to upgrade to Wallet Premium, which is $21.99 annually and offers a two week free trial period
3. Based on your income, make a budget.
Determine how much you make.
Your monthly budget depends on your income.
To figure out how much you spend and earn every month, add up your salary, any additional income (side hustles, second job, rents , investments ) you make, and the value of any assets you own. From there, subtract taxes that you pay to find out how much money you have left to spend in a month.
I recommend Budget to zero before the month begins.
This means before the month even starts, you’re making a plan and giving every dollar a name. It’s called a zero-based budget. Now that doesn’t mean you have zero dollars in your bank account. It just means your income minus all your expenses equals zero.
4. Do the budget together.
If you are married, sit down once a month and have a family budgeting night. Make it fun! Put on some fun music, grab some snacks and get ready to balance your budget. A budget is the key to having money available for all the things you really want and need. Remember: When two people get married, they become one–and that means their bank accounts should be one too. One account for both of you. It’s no longer “your money” or “my money”; now it’s “our money”.
5. Create a budget that aligns with your financial goals.
Focus on your “why”—what’s the point of all this hard work?
Say you’re paying off your student loans so you can purchase a home one day. Saving money for retirement is also a good reason to create a budget.You need to manage your money, not just make more of it. Save for the things you really want and cut out the things you really don’t care about.
6. Starting with the basics is best.
The key to getting your finances under control is to start with your biggest, most important expenses—your debts and your savings. Then make sure you’re covering all your essential monthly expenses, such as rent, utilities, food and transportation. After you’ve taken care of your true necessities, then you can add the rest of your expenses.
7. Each month is different
It’s important to prepare for upcoming special occasions and expenses in your budget. For example, birthdays and holidays happen once a year, but if you plan ahead, they shouldn’t sneak up on you. Pull up your calendar while creating your budget to make sure you save for those special occasions throughout the year.
Since things like car issues are unpredictable, make sure you have an emergency saving fund on hand.
8. Don't be afraid to trim the budget.
As times get tougher, it’s possible you’ll need to make some budget cuts. If you’re living on a tight budget, you can quickly trim your expenses by canceling your cable service, dining out less often, and buying discount clothing and groceries. Remember that your budget cuts are only temporary. You can always adjust them in the future if needed.
9. Set a schedule and stick to it.
After you’ve made a monthly budget, why not set up an automatic draft out of your checking account to pay your bills? You could also buy your groceries on a set day every week or twice a month. This will make the process of paying bills and buying groceries less stressful and leave you more time to do the things you love.
10. Track your progress.
As you work toward your goal, be sure to celebrate your small wins. Check in with your spouse or a friend to talk about how you’re doing. Once you’ve accomplished something, celebrate by treating yourself or someone else.
11. Use your debit card or cash instead of credit cards.
Cut up your credit cards! Many people in debt didn’t realize they were getting into trouble until the minimum payments they had to make each month started getting out of control. The easiest way to avoid this problem is by using a debit card instead of a credit card.
12. Use cash for certain budget categories on which you are overspending.
If you tend to overspend on the items in a budget category such as groceries , cash out that category and use the envelope system to stay on track. Just go to the bank and withdraw the amount you have allocated for your monthly spending in that category. Once you spend all of your cash, stop spending! This approach is an effective way of staying accountable.
13. Don’t compare yourself to other people.
Don’t compare your financial situation to anyone else’s. You can only be you. Comparing yourself to others will only fill you with envy and loss. Pay attention to what you have: a roof over your head, clothes on your back, and people who love you.
14. Take the time you need to get your budget right
Give yourself some time to figure out how to manage your money. It will take about four months for you to get a handle on it. You won’t get it right the first or second time, but you’ll get there.
Common Budgeting Mistakes
Reassess your subscriptions
Subscriptions, like Netflix, Spotify, magazines and Amazon Prime can seem affordable when you first sign up
These Services that charge a monthly fee may not seem like a big deal. However, those few dollars you spend can quickly add up to much more than expected. Before signing up, think about the programs you want and how often you will use them. Some services may be a waste of money if you use them only once in a while.
Review your budget on a regular basis.
When you’re figuring out how to start a budget, it’s important to remember that it’s a process. You should reassess your budget every single month. First, this is to make sure that your budget is working for you; are you saving as much as you can? Are you saving an amount that feels good to you? Second, this is so that you can adjust it if there’s anything new in your life. Maybe you lost your part-time job, or maybe the rent went up. Whatever it may be, if there are any changes that affect your budget, make sure that once a month you sit down and update it for the current month. This will ensure the best budget for you!
Be mindful of how often you eat out.
Eating out can get expensive. Between trips to fast food places for lunch, treating a friend to coffee or dessert, and ordering pizza when you don’t feel like cooking, these expenses can add up to a considerable portion of your income. One of the best budgeting tips for newbies is simply to learn to cook at home. A home-cooked meal can be anything from half to a tenth of the price of one at a restaurant.
Give yourself time to learn how to budget.
My last tip is to be patient with yourself.
You can’t expect to half your spending in a month. Neither can you expect to feel comfortable with budgeting in the first few weeks. It takes time and determination to understand how to make a budget and stick to it. Change takes time, so be kind to yourself. Remind yourself that this is a process, not an overnight transformation. There will be times when you might feel frustrated or overwhelmed, but remind yourself that this is normal, and that you will eventually get used to sticking to a budget. Keep your motivation high by constantly referring to your goals and remind yourself that this isn’t just for a month or two—you’re doing it for life! Also remember that everyone gets overwhelmed from time to time when they start budgeting; don’t let negative thoughts get the best of you. Budgeting from scratch can be hard at first, but it’ll only get easier the longer you stick with it!
Hey all you newbie budgeters! Congrats on taking a very important step in your personal finances – learning how to budget . You should be proud! Remember: every small step counts, so focus on the short-term wins for the long-term gains!
See you for the next buzz