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Budgeting is one of the major steps to take in reorganizing your finances or taking control of your finances. Its effectiveness doesn’t depend on how much your paycheck is but on how well you go about it. Not budgeting could be the reason you can’t get in control of how you manage your income and shortly we will see to that. There is no expertise when it comes to budgeting but rather steps that could guide you. Hence, what we will be learning today are simple budgeting tips for beginners to show you how easy making a budget can be.
What does budgeting mean?
Budgeting means planning how to spend your income. It is a process where you write down your estimated income and expenditure. If you are just starting to budget or want to give budgeting a try then you should know that budgeting is all about conscious spending. Where you work with your income and what it can afford you. You get to balance your income with your expenses.
Benefits of Budgeting
If there weren’t benefits to budgeting I bet you won’t be trying to know how to go about it. Let’s look at some advantages of budgeting and what you stand to gain when your budget.
- Budgeting gives you control over your money. You are not lost on what to prioritize and what not to. And if there is any nightmare worst than not being able to account for what a certain amount of money was used for. Budgeting makes sure it never happens.
- You can reach your money and financial goals faster when you decide to make a budget of your money.
- One financial advice that never gets old is saving money. When you make a budget monthly or weekly depending on how your paycheck comes. Saving money becomes really easy.
If you want to know all the many advantages of budgeting and how to make it work for you keep reading.
10 Best Budgeting Tips for Beginners
It’s about time you know what are those budgeting tips for beginners. hence, here is a detailed list of simple budgeting tips you can start right away.
1. Know why you are budgeting
Anything done without a purpose or drive won’t stand the test of time. So I believe the first step in making a budget achievable is having a concrete reason why you want to start.
The simple question to ask yourself is why do I want to start budgeting? Be it to save more money or pay off debt or become better at using your money. The overall reason is to have better management of our finances regardless of the size of our income.
So if you haven’t answered the question of why you want to start budgeting you might want to do that first. It will be your motivation and the fuel that keeps driving you.
2. Create a budget with all your money
Budgeting involves your income and when you don’t budget with all of it your budget will not be effective. This means including every little thing you plan to do as long as some cents will be used.
One benefit of budgeting as we have clearly stated from the beginning is that it helps you be in control of your income. It helps you know what you can cut down, can or can’t afford. Hence, even if you feel that coffee doesn’t cost much every day include it in your budget. You will come to see how much it cost you monthly and you might see that it is costing you a lot.
Therefore don’t leave any income hanging or expenditure unaccounted for include it all in your budget.
Steps to creating a budget
Preparing a budget might sound overwhelming at the beginning because you are just starting out. But as you get used to it, it becomes easy. Plus there are beginner’s budget templates and budget spreadsheets to help you out. Before all of that…
Here are some simple steps on how to make a budget:
- make a list of all your monthly expenses
- personal care
- car payment
- eating out
- health care
- Calculate your income which is every money you are going to earn for the month. If you have more than one job or many income streams write them down and calculate how much in total you will make in a month.
- Sum up your income and expenses for the month. You will either have a balanced budget or an unbalanced budget. Whatever the outcome of your budget do the following next.
3. Trim your budget
It is a budget therefore it can be adjusted. When the total of your budget doesn’t balance. which is that the expenses are over the income you should trim the budget.
However, if the expenses are below the income. Put that extra income into savings or emergency funds. The best thing to do is to invest the money rather than spend it.
Even if the budget is balanced you can still trim it. You don’t have to spend all your income every month. Automate the rest of it into savings to avoid overspending.
4. Prioritize your expenses
When making your budget as you’ve just seen in the steps to creating a budget above. The list you make should not just be random but organised based on needs that are important every month.
What are the important things on a budget?
What’s important to you is definitely not important to the other person. However, there are some basic needs that are common to man. such as housing, food, energy, and health. These should be considered first on the list.
If starting a business is in your plans then it should be prioritised too. So money towards it should be budgeted for. So as a vacation too. Budgeting is a flexible process that gives room for including and excluding things as our plans change through the year.
5. Test different budgeting methods
Not only because you are new to budgeting you need to try different budgeting methods. But so you can find the best budgeting method that fits your lifestyle.
As the months go by and you revisit your budget. Dabble with how you make your budget work and see which meets your needs and goals. There are different types of budgeting methods that you need to know so you practice and see which is the one for you.
6. Plan for unexpected expenses
Best budgeting tips without a plan for unexpected expenses are not complete. Just like you plan or save for emergency funds. You need to budget unexpected expenses.
Let’s not mistake unexpected expenses for bad spending habits. You are not budgeting for impulse spending but for emergencies that are important that you didn’t see coming. Something like a little shortage of groceries before the month ends.
7. Use cash to control spending
If you want to succeed at budgeting and reach your goals with ease. Controlling your spending is super important. When you go shopping use the cash you have not a credit card. This will help you live within your means and prevent you from taking more debt.
8. Goodbye credit cards
Credit cards are the one and only reason we live above our means because we can afford everything in debt. If you want to be successful at budgeting then you must begin to remove credit cards from your equation and work with case only as seen in the tip before this.
To reach financial freedom or stability whatever might be your goal. You need to tackle your debts and the fastest way is by frugal living. Living frugally will definitely require you to kiss credit cards good buy and start working with what you can afford.
So also not using a credit card makes budgeting achievable for anybody.
9. Track progress and goals
From the beginning, it was clearly stated that without a purpose or a reason to why you decided to start making a budget. You will not see results or might just quit as soon as you begin. But with a clear goal and purpose to drive your budgeting will be effective in your personal finance.
However, not tracking your goals to see if you are making progress or not will affect your budgeting. Remember budgeting is a flexible process hence when you track your progress you might come to realize that the current budgeting method might not be working for you. Then you can decide to try another one.
10. Don’t be too hard on yourself
Give yourself some slack. You won’t get it right from the beginning and that is fine. You might not stick to your grocery list or might even forget to make one when going shopping and it’s okay. Some bad spending habits you have might keep interfering and there is nothing wrong with that.
The only thing that is not okay is stopping along the way. If you don’t keep trying you will never be good at it and you will be throwing your chance of fixing your finances an easy way.
What are some tips to make budgeting achievable?
Even the best budgeting tips for beginners will tell you how to make budgeting achievable as it is completely up to you. However, here are some unique but simple budgeting tips to make budgeting achievable for you.
- You can automate some payments so you don’t tamper with the money or avoid delays that might cost you extra. Automation goes a long way in helping you save money too which I believe might be one of your goals for budgeting.
- Revisit your budget every month to make adjustments because what was a priority the previous month may no longer be the following month.
- Make your budget simple. As a newbie to budgeting, you might want to make your budget easy to understand and implement. Use a budget spreadsheet and beginners budget template.
How to be better at budgeting
To be better at budgeting is not rocket science. It simply requires discipline. The discipline to take your finances to the next level.
Avoid situations where you spend. try a no spend challenge this weekend or the week to come and see how much you save when you control your spending.
Base your budget on your income, not credit card and try by all means to leave within or below your means.
Final thoughts on budgeting tips for beginners
Whether you are new to budgeting or have been budgeting for a while these simple budgeting tips will definitely help you on your journey to financial freedom.
Hence, take them seriously and with some discipline, you will reach your money goals within a short period.