Budgeting is often viewed as a tedious or dreaded process. It’s not necessarily fun to think about adding up all your expenses and tracking your spending or dealing with a pesky spreadsheet and crunching numbers each and every month.
Budgeting doesn’t have to be this way though. It can actually be – dare I say – fun. Setting some type of
budget is crucial if you want to maintain or improve your financial situation and avoid unwanted situations like being in debt or not having enough money to cover an expense.
If you don’t have a budget yet, now is the perfect time to create one. If you have or had a budget but it could use some improvement, check out these simple and quick budgeting tips to help you stay on track this year.
1. Track Your Monthly Income for the Past Few Months
The first thing you want to do is see how much money you have coming in so you can start assigning it to categories and tracking how you spend it.
Start by writing down exactly how much you made for the past few months. If you get paid a salary, this should be easy but if you are paid hourly, you’ll need to look at all your previous checks and see what your gross and net pay was.
2. Sign up with a Budgeting App like Mint
To make budgeting simple, you can sign up with a legitimate budgeting application to help automate 90% of your budget instead of having to write one out from scratch.
Some popular apps include Personal Capital
and Mint. While Personal Capital focuses more on your investments in terms of your budget, Mint is a free tool that focuses on your spending in terms of your budget.
When you sign up with Mint, you just need to connect all your bank accounts, credit cards, debt accounts etc. so they can all be visible in one place. Every time you make a purchase with your debit card, Mint will update and categorize that purchase in a budget category. Mint can pull information from your previous bank statements to track your spending over time.
Mint makes setting and implementing a realistic budget easy by doing most of the heavy duty work for you. You can set goals and payment reminders on Mint, and create new budget categories manually as you see fit.
3. Pick 5 Expenses you Want to Trim or Cut Out
The next step involves cutting expenses. Once you know how much you’re earning and what you’re generally spending money on each month, you can start to question some of those expenses and decide if you want to trim or cut any of them out from your budget.
For example, if you check your Mint account and see that you spent x amount of dollars on dining out, you may want to adjust your spending in that category and cut it down. If you notice any other expenses that you may be able to do without, consider cutting them and try to cut or trim at least 5 expenses to free up more of your money.
4. Set a Savings Target
Determine how much you want to save based on your income and your spending categories. Then, schedule a monthly automatic transfer from your checking account to your savings account so you can start saving without thinking about it all the time.
Setting up automatic deposits allows you to easily pay yourself first and allow your savings to grow over time without disturbing your overall budget.
5. Do a Quick Run Through at the End of Each Week
Most people who dread looking at their budgets monthly may wonder why in the world they should have to do it weekly. If you spend 5 minutes at the end of each week skimming your account and reviewing how your budget went, you can avoid having to access everything for at least an hour at the end of the month.
Usually at the end of the month, we forget things or put things off and procrastinate which allows it to build up. If you take a few minutes out of your day once a week to check in on your budget, you’ll have less monitoring to do overall.
Do you budget? What are some things you like and don’t like about budgeting?
Photo credit: 401(k) 2012
Chonce is a freelance writer who’s obsessed with frugality and passionate about helping others increase their savings rate, eliminate debt, and work toward financial stability. She chronicles her journey to becoming debt-free on her blog, mydebtepiphany.com.
