When you hear the word budgeting, what is the first thing that comes to your mind? I hope you thought of saving money. Many people are intimidated by budgets. Budgeting does not have to be a hard or mundane task. Here are my 5 tips to start budgeting.
- Get excited! You are about to find ways to get your finances in order. Any way to save money or grow your savings, should be something to celebrate. Changing your mindset about money will help your relationship with money blossom and be healthy.
- Decide if you are a pen and paper type of person or one that prefers apps. I use both methods. I have a journal where I jot down all my finances when I make to-do lists and then transfer the financial information over to my budget planner. Those I also record my finances using apps like Mint and or within my bank’s app. Check out this Instagram post on the top 5 budgeting apps. I also utilize cash envelopes so I can stay on track as well. One of my favorite envelopes is for my Starbucks craving.
- Log into your bank account and either pull up your statements or sort through your transactions from the previous 30 days (some people will go as far back as 6 months). Either log into the app of your choice or write down all your transactions. Then take note of where you spent the most money. Also record the entries for your bills and services such as an oil change or getting new tires. This is necessary because you will also create entries in your budget for sinking funds.
- Know the difference between your actual budget and your sinking funds. Your actual budget includes all the income you bring in for the month and your reoccurring bills such as your rent, cell phone or utility bills, just to name a few. Sinking funds are when you create an entry in your budget with money you have saved for things such as getting a haircut, buying new clothes, birthday gifts, going on vacation, buying a new car, etc. Please note, you should, but it is not a necessity, have a secondary savings account, separate from your sinking funds. I prefer this option because I can see my budget in action by having my money separated.
- Start today! Start a budget and a money savings challenge today. Open a new savings account and move over a small amount of money. Start with $5 dollars and watch your $5 dollars grow. Then use steps 1-4 to help you succeed in budgeting. If you want to see how others budget, there are tons of YouTube videos illustrating ways to budget. If you need help with creating a budget check out this website(hyperlink new WordPress here) to inquire help with your finances.