The following is a guest blog post:
If you’re looking to take control of your finances, one of the best ways is to visualize where your money is going to, and coming from. Once you know where your money is all going to, you can then start to control your spending in specific areas, or amp up your debt payments.
How do you get this snapshot? By creating a budget.
It might not be the most entertaining thing to do, but trust me, it will be one of the easiest ways to get a handle on your spending. Don’t expect your first budget to be the perfect one though. It’s likely you will change it up to adjust to your life.
Here are a few tips to help you start your first budget.
You Will Blow Your Budget, It’s Okay
You can’t expect to always end the month under budget in every category, at least not at the start. Life happens – an unexpected expense will occur that will throw your budget into chaos (even if you prepare for it). Something will pop up that will cause you to spend a little bit more money than you planned for, and it’s okay.
When it comes to budgeting, it’s all about the long-term. You cannot expect to be the master of your finances after one month of budgeting. So, if you overspend one month, learn from it and keep moving forward.
Don’t Give Up
Budgeting is a tedious task that can seem like the end of the world some days. When that feeling happens, keep pushing through it. It may be easy at the start to throw in the towel and forget about your budget. Doing that, though, you won’t learn anything, and it will be a lot harder to take control of your finances. Keep your head up and work at it for a few months to really get the feel of budgeting.
Learn From Others
Don’t be afraid to ask for help with your budget. Whether it be from a friend, financial advisor, or financial bloggers, there is tons of support available to get you going with your budget. All of them likely have been in your shoes and can give you the advice to succeed.
Don’t Overthink It
It might seem like you need to add a category into your budget for every type of spending, but in reality, it will make it harder to track. Don’t overthink a budget – keep it simple.
When it comes to your fixed spending (those that stay the same, or you know you will spend money on every month), you can divide those into more categories. However, the spending that can vary from month to month, create a Miscellaneous or Everything Else category. That way, you still get a snapshot of where your money is going to while not overthinking the budget.
With that said, you still need to be thorough with your budget. Just because you shouldn’t overthink your budget doesn’t mean you can be lazy with it. A lazy budget likely isn’t an accurate one.
Being thorough means having a tracking system in place that works for you. Maybe you like the old school way of writing everything down or prefer an app on your phone. Whatever it is, have something to track your budget with and stick to it.
You also need to update your budget regularly. When you spend money, save the receipt and put it right into your budget. Don’t let your receipts build up to the point that you don’t remember what category each expense goes under. Stay on top of regularly updating your budget to keep it as accurate as possible.
Use these tips to help you through your first budget. Take advantage of the budgeting mistakes people share so you can avoid them. Your budget will be your best friend and worst enemy all at the same time. But, remember what it is there for – to get you out of debt and in control of your finances.
About the writer: Jeremy Biberdorf is the owner & founder of the popular investing blog modestmoney.com. Check out his site for latest investing news and tips
3 thoughts on “5 Tips For First Time Budgeters”
Great post Jeremy. Budgeting is an essential part of maximizing one’s money goals and you have some solid tips here. Tom
Tom @ Dividends Diversify recently posted…Dividends Diversify Grand Re-Opening Celebration
Glad you enjoyed this guest post. As the post describes we will “blow up” our budget form time to time but shouldn’t focus on those failures rather the long term goal.