Posted Oct 8, 2015
4 Tips to Help You Master Your Monthly Budget
If you’re anything like me, you’ve started working on a budget more times than you can count. It’s easy to want to keep track of your finances, just like it’s easy to want to go jogging or want to break a bad habit. The doing aspect, however, can be shockingly difficult.
The first billion or so times I tried to make a budget, the experience was approximately as frustrating as trying to explain quantum physics to someone who spoke a different language. There were a lot of questions I felt like I should have been able to answer, like, “How much do you spend per month on groceries?” I don’t know how much I spend on groceries; I just hope my card doesn’t get declined and the store lets me leave with my cookie dough. I mean, my bag full of responsible, nutritious groceries.
In the past, this has been about the point where I closed Excel and let the program lay in wait for the next time I felt ambitious about being an adult.
Eventually, however, a student loan bill inspired me to get in gear and figure out my monthly budget. I’ve finally found a successful method of keeping track of my finances: Here’s my advice for you to do the same:
1. Determine Your Method
Figure out whether you want to keep your budget in physical or digital form. Reflect on the organizational feats of your past: Were you the student who had the binder all your friends wanted to borrow, or were you the one borrowing the binder? Is your “Documents” folder full of alphabetically arranged subfolders, or is it full of files with super useful names like “note thing” and “liasdfkj?”
The super organized individuals among us are probably good with either option, but most people are going to find they favor one method or another. I use a digital budget that can sync between my phone and computer, a feature I almost never use, but like having nonetheless. You can use a free app for budget keeping like Mint, or the popular You Need A Budget if you’re willing and able to spend some money on budgeting software. Of course, you can always use a spreadsheet program to create a budget and track your spending.
If you’d rather go physical, make a binder with spreadsheets and folders you can use to track your spending. One trick you can use to keep everything manageable is to have two binders: a small one for your monthly budget, and a large one you can transfer the information to at the end of the month. This way, you have all your information on hand, but don’t have to flip through pages upon pages every time you want to jot down your morning coffee expenditures.
2. Track One Month of Spending
Instead of trying to plan your budget right out of the gate, spend your first month just tracking your expenses. This will give you a look at what you’re currently spending, empowering you to move forward with your budget.
Once you have your month of spending tracked, set aside some time to go over it. Distinguish between “need” costs, like bills, rent, and groceries, and “want” costs, like your happy hour tab. When you’re building your next month’s budget, plan your needs first, so that you’re able to cover everything. Once you’ve ensured your ability to pay the heat and electricity, you can figure out how much you want to spend on the more flexible categories like fun and travel.
3. Make Small Changes
If you look at your first tracked month and find yourself appalled by how much you spend at the local bakery, don’t rush to cut those scones out of your life. Making huge, sweeping changes to your spending habits isn’t going to work, and is likely to lead to you abandoning your budget entirely down the road. Instead, make specific plans about when you’ll visit the bakery and how much you’ll spend per visit.
These small changes are an opportunity to adjust your spending in ways that will benefit you in the long run. For example, see if you can skim a little bit off of your “want’ categories to add more to your savings account each month. As long as you’re not taking a huge amount from any single category, odds are good you’ll barely notice the difference during the month– but your savings account definitely will.
4. Try to Get a Month Ahead
Once you’ve gotten yourself into the habit of budgeting your money, make a plan to get a month ahead of yourself– meaning, try to get to the point where your current month’s paychecks are going toward next month’s expenses.
This is simple enough to do, though you’ll have to do it over a long period of time to make a smooth transition. Create a short-term savings category dedicated to this goal, and add money to it from each paycheck until it has one month’s worth of pay. Use the saved money instead of your paychecks for that month, and put your paychecks toward the future.
Getting on to this kind of schedule puts you in a very secure position, since you’ll always have your current month set. This way, if you have an emergency or other unexpected cost that goes over your budget, you have an extra month’s worth of time to recover and stay on track.
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