12 Best Tips To becoming better at budgeting
- Budgeting can seem overwhelming at times. Some people budget by just checking to see if there is money in the bank account. Then spend according to that number. However, what happens if a check clears or a bill goes through that you forgot about? Maybe you have written out a budget before and it just didn’t stick. Below are 12 best tips to help you set yourself up for a successful budget.
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Many people struggle understanding their spending habits.
- Did you know 65% of Americans have no idea how much the spent last month, according to this Mint survey? Tracking how much you spend forces you to see where your money is going. You can’t change what you don’t know. Tracking your money will help you know where exactly you may be splurging.
This happens because people do not budget.
- Budgeting can seem overwhelming at times. However, it is defiantly necessary if you want to live life on your terms and make “future you” happy. The more time and practice you have implementing a budget, the easier it will get. For me budgeting came from necessity. I became a single mom and I had to figure out what was a realistic path for me. I wanted the best life for my kids and I, with what I had. You have to be aware of what you making and spending your money on, to do that. Could I cut spending in certain areas? Did I need another sources of income? Would I needs to sell things? The only way I could answer these questions is by looking at what and how I was spending, developing a budget and a plan.
12 Best Tips to become a better budgeter.
What life do you want? Your budget and plan will be based on your values. You will see where you are and you get to decided where you are headed. Here are a few tips or “essentials” to become better at budgeting.
Tip 1: Decide to budget
- I know this seems simple, but the truth is you have to want it. You have to acknowledge that what you are doing isn’t working, for the life you want. From there, write it down. What kind of life you do want and how budgeting is going to get you there? Writing down your “Why” might help you when you’re not feeling up to it in the future or you hit a road block and need to pivot.
Tip 2: Calculate
- Write down all of your fixed expenses, how much and calculate.
- Then write all your variable expenses, how much and calculate.
- With variable expenses, it might help to do this by category. Writing out separate categories for car expenses, medical expenses, beauty, clothes etc.
- Make sure to check our bank account and all credit card statements to make sure you have an accurate picture of your spending.
- These calculations are the foundation of your budget
- I created for you, for free, two worksheets for both fixed expenses and variable expense in my 7 Secrets to Paying Off Debt, please click HERE.
Tip 3: Pick a budgeting method
- Zero based budgeting: every dollar has a place to go. You allocate where each dollar is going. Some goes to paying your mortgage, gas, food, your emergency fund…etc. Theoretically, at the end of the month there should be zero left to spend in each category (except for savings of course).
- 50/30/20: The method is to spend 50% of your total income on your needs, 20% on saving, and 30% on wants.
- Cash only: Sound exactly as it is. You only use cash. What you do is assign your money to your separate categories and then withdrawal cash out from your bank account. You then put the cash in envelopes labeled to match your categories. For the month, you spend, but once the money is empty from the envelope, so is spending in that category for the month.
Tip 4: Pay off debts ASAP
- If you are in debt, you should prioritize paying it off.
- More than likely you are paying interest and what you owe is growing if you are only making the minimum payments.
- You need to pay more than the minimum payments. Throw as much money as you can at this, until it is paid off.
Tip 5: Set realistic and flexible goals
- If you set $100 a month for gas, but historically you spend $200, you are going to have a problem. When you are budgeting, be realistic.
- Put a little wiggle room (or flexibility) into categories you feel you may overspend. So in the example mentioned above; maybe budget gas at $225, giving yourself $25 dollars of wiggle room.
- Another way to have flexibility is to have a “cushion” category built into your budget. Allocate $200 (or whatever is reasonable to your budget) for the unexpected. If you don’t that, great, more to put towards debt or savings.
Tip 6: If you have a spouse, include them
- If you are married or sharing money with a significant other, they should be included.
- Doing a budget together is best. However, if one of you writes out the budget, go over if with your partner and ask for their opinion and answer any questions they may have.
- Budget should be discussed monthly.
- Be kind and flexible
Tip 7: Have a safety net
- An emergency fund is a must! How are you going to pay off debt and be consistent, if an emergency occurs and all your extra money has to go to the emergency?
- Start by paying the minimum on your debt and building an emergency fund, first.
- $1000 is a popular number goal, but it can be more or less, depending on your needs and lifestyle.
- Once you have your emergency fund set, then start tackling your debt.
Tip 8: Have your own spending money
- Having separate money to spend is important. You don’t want to have to go to each other every time someone wants to buy a coffee.
- This enables each person to have some independence with how money is spent.
- Agree together beforehand what amount each of you should have per month or per week.
Tip 9: Track it
- At a minimum, you should check your budget monthly.
- Weekly, check your bank account to see if everything looks on track.
- Make notes of what you have underspent or over spent.
- Are there any adjustments you might need to make?
Tip 10: Be flexible
- Change takes time.
- Don’t abandon the whole system you set up just because it did not work the first month. I would recommend waiting 3-4 months before changing to another system, if it’s not working for you.
- Do take notes and try to change little things. Adding or taking away money from categories where you over or underspend.
Tip 11: Automate what you can
- Use auto pay on anything you can. House payments, water, trash, ect. Usually any fixed expenses can be taken out automatically through their websites.
- You can also have your bank do a thing called “bill pay.” Which you set up online and they send a check to whoever you need, on whatever day you choose.
- This way you are not incurring late fees on “accident” and creating more debt.
Tip 12: Use Apps
- Apps can make your life easier. Most banks and credit cards have an app, so you can check on your balance.
- Mint is a great free app that connects all your accounts.
- A step up from Mint, is Co-pilot, this app also connects all your accounts, has budgeting tools and you can see where you are spending and see what bills are reoccurring and coming up.
- Use my code to get a month of Copilot free: Click here for the link. Code: RWCN9T
- Becoming better at budgeting doesn’t happen overnight. However, if you keep showing up, keep adjusting, trying and be flexible; you will get your finances in order.
- Make it a part of your routine to work on your budget, just like you make time to brush your teeth, sweep or mop the floor.
- If you want to know the 7 Secrets to Paying Off Debt, with FREE worksheets, please click HERE.