Budgeting Basics

Updated: Mar 22, 2021

Budgeting: Your Financial Road Map & Why It's Important

Part 2 of Our Cultivate Your Financial Wellness Series.

If you remember part 1 " Financial Tips Before Your Start Investing" Kicked us off. Now we are entering the world of budgeting and offering tips, tricks, and hacks to make it easy and simple.

How To Build A Budget

With a budget you can plan for your financial goals and track your spending.

Establish Goals

The most important thing for budgeting is to establish goals

If you would like to purchase a home, car, plan for your kids college or establish an emergency fund you'll need a budget to track your progress.

Benefits of Budgeting:

  • Helps You Stay Focused On Your Financial Goals

  • Gives Insight Into Spending Habits

  • Provides Information On Unnecessary Expenses

  • Could Potentially Boost Your Credit Score

  • Will Lead To A Happier Retirement

  • Enables You To Prepare For Emergencies

  • Enables You To Track Your Progress To Understand Where You May Want To Make Adjustments In Your Behavior

Investopedia has a great article on 6 Reasons Why You Need A Budget

Budgeting Simplified

Budgeting Strategies - How To Create A Budget

Manual Budgeting

You can track your budget manually on paper, or and excel spreadsheet weekly or monthly by pulling your accounts, receipts, or statements and tracking your spending. If you perform this manually you'll want to:

  1. Create Categories

  2. Total Up Your Expenses per Category

  3. Create a Nice To Have, Must Have Bucket, & Goals Bucket

  4. Determine How Much You Want To Increase Or Decrease Your Budget From Your "Nice To Have' & 'Must Have' list

  5. Create A Budgeted Amount Per Category: An example of this is spending $1100 for rent and household items. Decrease your decorations to stick within you budget.

  6. When you start realizing you are saving money, allocate those savings to your target goals and take a small amount to reward yourself. I like to reward myself with a $5.99 smoothie. It's rewarding and makes me feel good because I know I'm being disciplined to achieve my goals.

Automated Budgeting

For those that are strapped for time, there are quicker options available. You can use an app or online program that will link to your bank accounts and automatically pull in data and let you create targeted spending for various categories like food, auto, entertainment, home expenses, and healthcare.

We use a free app that the team here utilizes is Mint.com for budgeting, tracking your expense and income, and your credit score. The great thing about Mint is that it provides recommendations after analyzing your accounts on what would be best for your situation. Now some of these are sponsored links on their site or partner offers so decide for yourself if it's worth it to open that new credit card, or shop around for better auto insurance. but there are 7 Best Budget Apps for 2020 here. Some are free and others have a fee.

If you have advanced questions such as:

  1. How Should I Set Aside For Investments?

  2. How Much Should I Allocate to Debts Like Credit Cards or Car Loans?

  3. Should I Overpay My Mortgage?

  4. How Should I Maintain & Update My Budget

  5. Why Do I Always Have Expenses That Don't Fit Into My Budget?

Check Out This Helpful Investopedia Article That Explores What You Should Do If These Are Questions You Have Floating In Your Mind.

We hope this article has been helpful, if it has go ahead and give us a heart. If you want to see more information drop us a message.

The best time to start budgeting is Now!

You can't know where you are going without a map or gps, the same is similar in your finances

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