If you intend to stay on top of your finances, you’ve to know where your money is going. “Keeping your finances in order is a matter of organization and budgeting beyond anything else,” comments Phil Gibbons, an employment lawyer in North Carolina. “No matter how much you make, if you don’t have a budget, you’ll find yourself constantly running short.” The best way of creating a budget is to find a technique of keeping track of how much you make, and how much you spend each pay period, and figure out how much you have left over. That way, you’ll know what you can spend on frivolities, and how much you can save each month.
Although budgeting can seem tedious, there’re many ways of making it easier, if not effortless.
Your phone is a good start. Apps like Mint can assist you in creating a budget and keeping track of your money. Mint is a free tool which connects your investments, bank accounts, and other spending to help you monitor and assess your income and expenditures. It also alerts you if you’re overspending, and gives you a report of how well you stuck to your budget each month.
Mint also enables users to input debts and assets manually. Manual accounts are a superb way of keeping tabs on debt or income that might not be linked to your online accounts, like cash, wages or tips.
However, Mint, it isn’t the only app available. Mvelopes, for instance, is a subscription service which can sync up your accounts and monitor every dollar. Mvelopes has packages from $4-$79 per month, with some offering options like financial coaching and debt reduction.
You can as well as use Spending Tracker, an app which asks you to log every purchase, and notifies you how much you require to earn each month to save or break even.
It’s therefore important to find an app, which works well for you as it really comes down to preference.
Offline budgeting tools
Those warring to use online tools can pay for budgeting software like Quicken. With Quicken you have to categorize everything like setting up a budgeting system and applying labels to expenses and income. But it can be the best way to maintain a budget for years. Users can download information from their account, banking and investments, then analyze and keep track their finances over time.
You can use simple Excel spreadsheets as well, to keep tabs on spending.
The Envelope Method
If you’re tech averse and choose to stay offline, you can just keep track of your budget by hand.
Those who mostly use cash might want to try the envelope approach: Label envelopes with expenses or bills—“rent,” “food,” “savings,” “utilities,” “entertainment,” etc.—along with their exact costs. Then fill the envelopes with their respective amount of cash. Once you exhaust your “entertainment,” envelope, it means you’ve spent your entertainment budget for the whole month.
The aim is to ensure every cent you bring in is proactively allocated and accounted for. As each bill comes due, just find the corresponding envelope and settle the bill either directly, or by a cheque or deposit.
This system may seem annoying at first, but with time, the monthly upkeep will become natural. At least try to keep track on your finances for a year. I can almost guarantee you’ll be shocked at how much you save when you’re paying attention.