We hear the word budget all the time when it comes to spending money but what does that mean to you? Do you have a budget and do you use it?
Before you start calculating and crunching all those numbers, stop! What you need to do first is start tracking your money for about a month. Where are you spending? Where are you saving? Where is all your money going?
Carry a small notebook and every time you spend money on something, jot it down.
Once you have an idea of your spending habits, you can create a budget that’s realistic.
“That’s the reason most budget or spending plans fail is people are using unrealistic numbers and you can’t keep or match those numbers so then they get frustrated and they quit,” said Sandra Dunaway with Consumer Credit Counseling Service.
Next, take some time to create categories of monthly expenses.
“Groceries, utilities if you have to pay daycare, the expenses you have every month. You don’t want to have 30,000 different categories but you will begin to see they all clump together,” Dunaway said.
Go through the calendar. Remember that birthday gift and anniversary present you want to buy? Of course holidays play a factor: Valentines Day, Christmas and you may have some not so nice insurance premiums. Remember to factor in those periodic expenses we tend to forget about until a deadline is upon us.
“It’s great to start tracking your money and budgeting at the beginning of the year so you can put aside a little money each month if you’re saving for a big present of a vacation in the future,” said Dunaway.
Technology is a great tool you can use to your advantage with apps like Mint where you have all your information at your fingertips but Dunaway reminds us to keep hard copies of all your receipts.
Expensify is great app for digitally storing receipts.
Other money managing apps include:
iReconcile, Expenditure, MoneyBook, and Toshl.
Before you download, ask yourself if the app meets your needs, is it secure and is it worth paying for?
Of course it’s always helpful to see all the information written down and Dunaway said that make help you keep the value of a dollar in mind.
“It’s going to be much more meaningful if you write the info down and then put the information into a software program or something like that. You’re doing the work but yet you’re letting technology handle all the crunching for you,” Dunaway said.
Last but not least, make sure to include saving in your spending plan.
At the end of the day, all you need is a system that works well with you whether that’s a pen and paper, laptop or an app.
For a limited time, the Lifelines Counseling Service is offering free budget and credit counseling. It’s first come, first serve until the grant money runs out.