Never miss another deal! ✂️ Sign Up For The Daily Deals Mailing List ✂️ Group
How to Start a Budget You Can Live With
If you’ve tried to work with a budget before and it hasn’t worked out too well or you’re new to the idea of budgeting and don’t know where to start, I’m here to help.
Wherever you are on your budgeting journey, these steps will help you set up a system that allows you to use your money decisively without worrying about a traditional budgeting system.
Here we go . . .
First: Track all of your spending
Get started by keeping track of your spending for the next few weeks. This will show you exactly where you are spending your money; it may surprise you to discover where your money leaks are. You will need this information to make some changes down the road.
Don’t worry about making changes at this point. It’s more important to just start building the habit of knowing where your money goes.
Try a few different methods if you need to before deciding which one works best for you. Here are a couple to try:
By hand –Create a spreadsheet or keep a money journal. Manually enter each of your transactions (cash, debit and credit) every day.
Mint.com – Use this free app to sync your accounts and keep track of your credit and debit purchases for you. You can enter your cash transactions manually.
The most important part of tracking your spending is to be consistent with it. You need to stay on top of where and how you are spending so that you can quickly find any money leaks.
Second: Make bill payments automatic
By automating your monthly payments, you don’t have to worry if you’ve paid them and paid on time.
For some bills – like utility bills – you can create automatic payments with your checking account or credit card online.
For other bills – like rent – you can use the “bill pay” option to schedule a payment that goes out on the same day every month.
Third: Make savings automatic
Instead of waiting until the end of the month and saving only whatever you have left over, set up automatic transfers to move a designated amount from your checking to your savings account on the same day every month.
It’s the best way to make steady progress towards your savings goal each month.
Fourth: Start reducing expenses
Now that you have a basic budgeting system in place, you need to start getting more purposeful with your money.
Don’t try to change everything at once, you won’t stick with it; it will be more effective to focus on changing just one thing at a time.
Monthly bills are a great place to start reducing your spending. Take a close look at all of your monthly utility bills and look for places you can cut back. Do you use all of the services you are paying for? Can you get the same plan for a lower price from a competitor? Call your utility companies and try to negotiate a lower rate, they may be willing to offer you a discount and it will save you the trouble of transferring services and setting up a new account with another provider.
After you’ve done that, review your interest rates on all of your loans and credit cards. Refinance or consolidate wherever possible to reduce interest rates.
Fifth: Build an emergency fund
No matter how good your budgeting system is, something unexpected will always come up. Having an emergency fund will allow you to more easily deal with any unexpected items. Try to build a savings of at least $1,000. After that, move on to next level of saving and work toward building 3-6 months’ worth of expenses just in case you have an expensive emergency, get sick or lose your job.
Now that you have a system in place that you can work with, you can start using it to work towards your most important financial goals.