Financial planning is a must to get your financial life in order, and any financial plan is incomplete without a solid budget in place. Budgeting can be hard and no fun, but the truth is making a budget is an essential step for controlling and managing your finances or your family’s finances.
So how do you make a budget if you hate budgeting or if you are not good with finances? Avoid thinking of it as a test with only one right answer. A lot of people hate budgeting because they think of it as something you either pass or fail
If you’ve been resistant to budgeting but are looking to reshape your finances, consider these creative budgeting ideas to simplify money management and make it more enjoyable:
Calculate Your Net Income
To start a budget, you’ll need to figure out your net income for each month. This means your income minus taxes, insurance, 401K deductions, retirement account savings, etc.
Determine Your Expenses
If you’re feeling overwhelmed by all of your regular expenses, creating a basic four-walls budget can provide a simple, manageable way to prioritize.
The four walls of your budget are housing (including utilities), transportation, food (not including eating out), and clothing. Paying off debt should also be considered when you’re focusing on how to budget when you are not good with money.
Record your spending and track progress
Recording and monitoring your spending are important to be able to control it. Even if your spending is under control, there can be huge scope for saving more money by cutting on any extra expenses. Tracking your progress and continue working to save money is exactly what forms the essence of a budget.
Focus on saving
So you’ve got the basic expenses covered. Great. Now it’s time to factor in saving. A simple creative budgeting idea to prioritize saving: pay yourself first, then spend what is leftover.
Determine how much you want to save each month or each paycheck, and then deposit that amount into a savings account before you spend it on anything else. You can even remove the temptation to spend by setting up a recurring automatic transfer from your checking account to savings.
Make room for fun
Your budget doesn’t need to be limited to the “four walls” and savings. When considering how to budget, you should also make room for the things you enjoy.
Remember that, as long as you’re paying your bills on time and saving for long-term goals, spending money on what you love isn’t a detriment to your financial health.
Use technology to your advantage
Though you should start off by budgeting somewhat manually, it doesn’t have to be that way forever. It can be helpful to use a mobile app like TimelyBills or other technical advances that work with your personality and habits.
Play around with different options until you find one that works for you. Having your finances available on the go and easy to understand will help you stay within budget.
Budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you. The importance of making a budget is a financial lesson that cannot be overemphasized. If you and your family want financial security, following a budget is the only answer.
If the word “budget” has negative connotations for you—if it makes you feel anxious or overwhelmed, like you’re focusing too much on what you can’t afford—try thinking of your budget as a guide to help you build a better future.