Budgeting has been on my mind lately. Budget on the brain. One of the most important tools that allows my husband and I to live within our means is our budget. A budget is often thought of as being extremely restricting and a pain. But a budget done properly can help keep your finances in check and maybe even help you sock away some money for savings. Savings – something we hadn’t really thought of much when we first married. Now we are comfortable and if an emergency should arise, we would (hopefully) be okay.
A few years ago we kept every receipt in a mangy old shoe box and manually logged each expense in a notebook. The system worked but was rather cumbersome. I constantly had to search my husband’s pockets for receipts, kept losing them on trips, you get the idea. Within the past couple years I have discovered a website/app for budgeting. If you’ve already established a budget or use another program you’ve probably heard of it – Mint.com. I urge you to check it out. It’s free! If you’re a visual person like myself, it’s great seeing bar graphs, pie charts, and colored numbers to help you reach your financial goals! The interface allows you to see how much money is in each account, how much debt you owe, and you can even link investments. You control which accounts you wish to link to mint.com and you set your own budget.
The first step we did was link our accounts and credit cards (the website/app will guide you through this). With mint.com you no longer need to keep unwanted receipts, just for items you may need to return. This meant my shoebox could be thrown out! After we linked our accounts we went on living like usual, but began taking note of where and what we were spending our hard-earned dollars on. At first it was quite shocking. We were spending a lot of money eating out. These weren’t fancy dinners either, mind you. I’m talking about grabbing a burger on the way home from work, paying $3 here and there for a smoothie or coffee, you get the idea. Small purchases can add up fast. Not long after using the app we began to realize how much money we really were spending (on frivolous things), and that if we kept on that path we were headed for trouble. If you’re reading this and feeling like we were then you need to get yourself a budget. If mint.com doesn’t feel like your cup of tea, there are many other budgeting websites available. A simple Google search should get you on the right track.
Another way to budget would be the good old fashioned way: pen and paper. Sit down and make a list of every expense that occurs each month. For us that would be our mortgage, electric, gas and water, health insurance premiums, Netflix, internet, and phone bill. These are only the expenses that are guaranteed to happen each and every month. Notice this does not include fuel, food, entertainment, gifts, etc. Start by figuring out how much you spend every month just by living. Then make another column for expenses that may fluctuate a little more such as food, fuel, and clothing. This may be difficult to do if you are just beginning to budget, so approximate at first. After a while you will begin to notice your spending habits and you will be able to adjust your budget numbers accordingly. For us it took a few months to set a firm budget with firm numbers. Now, we have been budgeting for so long it’s automatic. The numbers are in our heads (probably along with some crazy voices too) and we know how much we are allowed to spend each month on certain items. You may find that you are spending in areas you may not need to, or you are spending too much in one area. For many people it’s food. Eating out, grabbing coffee, ordering a pizza on weekends, and trips to the vending machine are common for most people these days. Once you find out where you are excessively spending you can begin adjusting your spending to fit your needs better.
Stay tuned for Budget Basics Part 2 – Creating the Budget. This segment will be about allotting numbers for each category, ways to manually create a budget, and socking a portion away for savings.
What website or method do you use to budget?
– Thrifty & Domestic
Check out mint.com on your computer and get the app on your smartphone!