Budgeting 101: 5 Tips to Set You Up for Success!

Budgeting is an important step towards a healthy financial life. It gives you the ability to look at your monthly income and create a clear plan. Whether your goals include paying off debt, saving for retirement, or cutting back on day-to-day expenses, a budget can help you achieve your goals faster. Here are a few useful tips to get you started:

1.     Know Your Income

Budgeting begins with knowing how much your take home pay is. By identifying how much money you are bringing into your household each month, you are able to better allocate each dollar to reach your goals faster. For earners that are not on a fixed income, using your average lowest earning month can be a great place to start.

2.     Choose Your Strategy

Finding a budgeting style that works for you is a bit like dating - so don’t be afraid to swipe left on the bad ones! Pick one and stick to it for a month or two, if it isn’t the right fit then try another. A few to choose from are:

·      50/30/20 Budgeting

·      Zero Based Budgeting

·      Cash Envelopes

·      Try a budgeting app (My personal fave is EveryDollar)

3.     Give Yourself a Margin

Trying to keep track of every dime you spend can become a bit tedious and, in the beginning, you may miss an item or two. By setting aside a small amount of money it gives you a bit of breathing room and can be a margin of error in case you forget something! If you don’t tap into your margin, then move this money to where best aligns with your goals.

4.     Pay Yourself First

Try budgeting for your savings before anything else and paying your bills with what’s left. An even easier way to skip past any excuses it to set up automated saving contributions. This way when you access your bank account on pay day, the savings are already in a different account!

5.     Emergency Fund

Having 3-6 months expenses set aside is SO important. Emergencies are a guarantee in life and it is so much easier to have the money set aside to help you out of a bind!

Creating a budget can get a bad rap and seem really boring, but budgeting truly gives you permission to spend! We all love the “treat yourself” mindset, but treats are so much more enjoyable when you’re not stuck crunching numbers and filled with stress at the end of the month. I encourage you to try the budget spreadsheet and figure out what strategy works best for you!