A budget is your friend.
(Seriously. The responsible one who’ll take care of you when you get a little crazy in Vegas.)
If you want to get more out of your hard-earned dollars and stay out of debt, you’ll need to get a handle on your savings and spending. That starts with making a budget. There are several ways to make this daunting task easier. Let’s jump right in!
First things first
The first thing you have to do is to take stock of your current expenses. Gather your critical monthly bills, such as rent or house payment, car payment and insurance, utilities, etc. and add them up. How much is left? This discretionary income is what you can choose to save… or spend on entertainment, dining out, and other nonessentials.
TIP: Use a budget template from your favorite spreadsheet program (e.g. Microsoft Excel, Apple Numbers, etc.), or try our Household Budget Analysis tool.
HOME BUDGET ANALYSIS CALCULATOR – Analyze your budget, see where your money goes and find out where you can improve.
Some guidelines for how much of your income you can spend on certain items:
- 50% on necessities, like rent, utilities, groceries
- 20% on savings and debt payments
- 30% on nonessentials, like entertainment and dining out
Once you have this information in hand, you can start setting saving goals and choose a way to stay on budget.
Cash is king
One way to keep track of your budget is through the Envelope Method. (It’s old school, but it works!) This cash method will help keep you honest, because you put cash into envelopes and have to stop spending when you run out. To use this method, you withdraw the funds remaining after paying your essential expenses and divide that into envelopes for various categories, such as Dining Out, Concerts & Movies, Trips or whatever you like. (And, yup, when it’s gone, it’s gone!)
Next-level virtual tracking
Where’s your money going, anyway? If you need a clearer picture of your spending, you can monitor transactions in online banking — or, you can take the additional step of setting up Money Manager, which is a customizable tool for tracking your spending.
What’s cool about Money Manager is the way it helps you categorize expenses and set up target budgets. Then, it shows you charts and graphs of your spending habits, which can be really helpful in guiding you over the course of the month!
Some of the beneficial features of Money Manager include:
- Customizing your budget tracking in a way that works for you.
- Letting you track how you’re doing on target budget categories.
- Enabling you to view and compare your cash flow, total budget and target items month to month.
Whether you’re just starting out or you’ve had a change in income, Money Manager can clarify what you’re spending and where!
Automation will set you free
Even if you don’t have time to make a budget right this moment, you can set up automatic payments and deductions that will ensure that you won’t miss payments or forget to drop some green into your savings account.
For full control, you can set up scheduled transfers and use the Bill Payer feature through online banking. If you give in to temptation rather easily, though, you may want to give us the reins and let us handle it. (Your future self will thank you!) You can also do a little bit of both if you prefer to keep some flexibility.
These free services are wonderful ways to help with budgeting. You don’t even have to think about them… they happen automatically and POOF! You’re saving!
Here are a couple more tools you may want to check out:
COOL MILLION CALCULATOR – Find out when your savings plan may make you a millionaire!
EMERGENCY SAVINGS CALCULATOR – This calculator helps you determine how much emergency savings you may need, and how you can begin saving toward this important goal.