It doesn’t matter how often you have money coming in or going out – you must learn how to create a budget. As a beginner, however, there are certain fundamentals you’ll need to grasp first if you want to be able to manage your finances efficiently.
Here are six easy steps that will make this process easier for first-timers:
1. Commit To One System
Are you going with the envelope system, the 60% solution, the values-based budget? Make sure you pick one that’ll suit your specific needs as this will make it easier to be consistent with how you budget.
If you feel something as physical as the envelope system will work for you, then go for it. If you feel you need the kind of convenience only a spreadsheet can offer, then that’s the direction you should take.
Is the idea of mobile budgeting more up your alley? If so, download a budgeting app that includes a tax return calculator to take care of your budget and tax planning in one easy place.
2. Be Accountable
You need to answer to someone to make sure you’re being faithful to your budget, even if that someone is you. Going back, checking up on it, and making the necessary tweaks will go a long way toward helping you stick to the financial goals and parameters you’ve put in place.
The most important thing is to make budgeting a part of your lifestyle. Create a whole ceremony around it – anything that’ll engrain it so deeply into your subconscious that you can’t help but follow through on your commitments. If you can’t be accountable to yourself, get a friend or financial planner to help you out.
3. Cut Out The Extras
To get a balanced income-to-expense ratio, you may need to make some reductions to some of your expenses. This could mean simply pinching a few dollars here and there, or it could mean cutting out certain expenses completely.
For example, you might rely on using the internet at home to work, but you could be paying too much. In this case, searched for internet service in my area to find better deals to save some money. You’ll gain more control over your finances in the process, and that’s the whole point of budgeting. Of course, it could also mean making bigger changes like switching to the best medical spa software for your company that is also budget-friendly.
4. Get Your Records In Order
Any record of your spending should be kept in a secure and orderly way. From bills and bank statements to receipts, they should all be stored in a single place that you can access at any time. While digital storage is ideal, it’s important to maintain excellent cybersecurity to protect this sensitive private data.
All the money going in and out should be reflected in your records in some way. Doing this will help manage your expectations for the months ahead because you’ll know what the average month looks like for you.
5. Accommodate The Unexpected
You’re not a machine, and no matter how predictable your finances can be, there are some things you can’t predict. No two months are the same, and there’ll be instances when you come up short or an unexpected cost arises. Such moments are inevitable in life, so you need to be prepared. The best way to do that is to set aside some money just in case.
6. Learn More
An education in finance never hurt anybody. Follow a financial blog, get a book on money management – whatever it takes to increase your financial knowledge. Your budgeting efforts will be far more fruitful if you set aside some time to learn about personal finance.
If you’re still feeling a little lost, it may be time to get a financial professional to shed some light on how you can approach the whole budgeting thing. Ask questions, keep researching, and put theory to practice.