So you have started to budget…YAY! This is a huge step in the right direction and it is the FIRST step in making your money goals a true reality. Maybe it is going well, and maybe it is hard for you…the fact is this takes practice and it will become easier over time. Here are 6 tips that will help you budget easier and get results sooner.
1. Keep it Simple
The best way to get started is to make a very basic list of your monthly income and expenses.
List things you can easily identify like rent or mortgage, car payment, insurance, utilities, etc. Here we are just getting the “BIG PICTURE”.
2. Figure out your MONTHLY INCOME (after tax)
If you have other sources of income, include those as well.
3. Figure out your expenses
- Category wise, you will usually have far more expense categories than income. Just group them into categories as best you can and don’t worry about what you spend right now.
- For example these are some popular categories:
- Car Payment
- Car Insurance
- You can always categorize, but just get the basics down and try to think of everything because you normally will have a lot of hidden expenses.
4. Establish estimates for monthly expenses.
- Write down the reoccurring amounts you pay each month for each category you created in Step #3
- Make your best guess at those items that are not reoccurring.
5. Track your spending/expenses and income
- For 30 days track everything you spend during a given month.
- Be sure to record the expense for the month it occurred not the month it was due. I would suggest trying to get all of your bills due on or around the same time of month.
- By matching income and expenses you will be able to determine if your monthly expenses exceed your monthly income or not.
- Also track your spending each day
6. Automate the process
- Use online bill pay and keep track of your spending and income each month.
- Try to save everything for one month after paying your bills and see how much you can save in a 30 day time span.
You’ve got this. I mean it. You just need a “YES I CAN” attitude toward budgeting and be committed to continuous improvement. It takes time to see the fruits of your labor but consistency is key! YOU CAN DO IT!