For anyone not already using a budget, starting one is easy and it’s never too late. Budgeting helps control spending and saving, even for folks living on very low incomes.
A budget helps plan for monthly bills like rent, electricity, and credit cards. Bills aren’t a surprise because the budget has plans for payments. Budgets also help someone prepare for unexpected bills, such as medical expenses or a car repair, and for long-term goals like tuition, a wedding, or starting a business. A regularly saved amount to become an eventual downpayment on a house or new car.
To start a budget, make a list of all monthly expenses, as well as due dates for all bills. Include everything, from groceries to clothing to rent. Include goals as well (that new car or first home). Then plan to put aside a small amount each month toward savings goals. And don’t forget to include expenses that only happen once or twice a year, such as car registration or insurance payments. After creating this list, figure out how to divide each paycheck to cover all bills, and include some money in each budget for savings, if possible. Ideally, there will be some money left over each month after paying all the bills.
A budget can be as simple as keeping track of money using a spreadsheet or a piece of paper. Many free budget templates are available online and most credit unions and banks offer tools to help keep money organized. Explore and learn about the budgeting features from the financial institution’s website. With online banking, it’s easy to set up separate accounts to separate the money for paying bills from money to save or to spend on luxuries. Separating money this way can help anyone avoid spending what they can’t afford. Working with an online budgeting feature, create categories for different transactions to help organize spending. For example, a category showing the amount spent on food each month (both take-out and groceries) might be surprising and show a place to cut spending, if needed.
With a budget set up, adjust it every once in a while, as necessary. But most of the work will already be done. Taking charge of money through budgeting feels good and is a path to financial peace.