Knowing how to budget is a valuable skill to have in life. It can help you have less financial stress, help to make your money stretch further, help you make smarter financial decisions, and overall let you have a better quality of life.
It isn’t about being “tight” or “miserly”, it’s about being financially wise and knowing that being financially wise will help you and your life in the long run.
If you want to learn how to budget so that you can reap these benefits for yourself, you have landed in a handy place.
This blog is going to tell you, in super easy and accessible ways, how to budget for yourself in an efficient way. There is no big hidden secret that will be the magic answer to all of your problems and there is nothing we are trying to sell you or convince you into. It is simply a guide of helpful, handy tips on how to budget your money as best you can.
Ready?
Then let’s begin.
1. Know exactly what is coming in and what is coming out
If you want to know how to budget, you need to know what you are budgeting with. Before you get started with any other tips and tricks, you simply need to know how much is coming in and out of your bank account(s) each month.
Sometimes we avoid our bank accounts and statements like the black plague because they feel scary to look at. It can be much more fun to live in denial and never check things. But, this means that we are using our money based on assumptions and not facts, and this is where things can go wrong.
We need to keep a track of our money and the best way to do that is with a free visual aid, something like one of the free templates with Microsoft Office or a handwritten track record kept in a diary or journal. Do it whatever way works for you, all that matters is that you have an accurate and ongoing track record of what money is going in and what money is going out. From there, you can know more accurately how to budget those exact figures.
2. Keep an eye on those pesky hidden spends
Once we do get all of our finances and expenses out in the open, it is easier to know how to budget because we can see things for how they really are, and this usually includes seeing where our money is being wasted and taken without us even thinking about it.
Subscriptions are a big part of this in modern finances. There are a lot of us who have subscriptions to things we have forgotten about or things that we barely use anymore. Making sure that we keep an eye on our accounts and our finances means we can see these pesky hidden spends and knock them out.
We can take any money from unnecessary or hidden spending and repurpose it for something more worthwhile. You could cull your subscriptions and budget that same money every month into a savings account or an investment fund, but we will talk about that a little later in our list!
3. Use an app to make things easier to track
Knowing how to budget isn’t an intuitive skill for everyone, and that is ok. There are lots of apps and services out there to help you and there is absolutely no shame in using these. I actually think they are a great tool for a wide range of people in terms of financial security and budgeting.
You can use apps to help you track your spending, divide your income into different pots or accounts, and even use your money to get benefits such as cashback or dividends. Whatever app or service you use is up to you, it will work as long as you use it consistently and with care. Take a stroll around the App Store and see what seems like it would work best for you, and then get to work.
4. Avoid “no spend” periods and go for balance instead
When you read how to budget articles and blogs, you will very often see the advice of having “no spend” days or weeks. These are times in which you spend no money at all.
I don’t think these are realistic.
It is the same with dieting. If you cut yourself off entirely and restrict too much, you are much more likely to go on a binge the week after.
The best thing you can do with budgeting your money is go for long-term balance rather than extreme ups and downs. Everybody needs to spend on essentials, but everybody also deserves to spend their money on enjoyable things at times too. You can do this while budgeting appropriately so don’t feel that you need to cut your finances off entirely for certain periods of time, this simply never seems to work the way we would want it to.
5. Think longterm
As we’ve mentioned, thinking long-term is the best way to think about your finances.
If you want to get serious in knowing how to budget, you will need to think about investments and investing your money in your future. And it’s ok if you don’t know the first thing about this yet, there are tonnes of good, free guides on how to invest in stocks and other investments all across the Internet.
Budgeting your money will only get you so far, you need to make sure that your money is earning its keep rather than sitting in a bank account decreasing in value due to inflation.
It might seem like scary stuff but it isn’t really once you get into it.
You can always call on the help of a financial advisor if you feel like you need some more support with it.
Overall, once you start to engage in healthy, long-term money habits, you will see your life change in many great ways. This is something that I think we all need in today’s climate, to keep ourselves happy and protected.
What do you think? Let us know in the comments below!
And…. while you’re here… Check out more of our lifehacks, right here!