Imagine that one pay period, your take-home salary is $1,200. You decide to grocery shop and end up spending $350. Next, you pay your car bill of $250, your rent of $500, leaving you with $100 left. Oh no! You are not done paying over due bills yet! You still need gas for your car to last another two weeks before you get paid again and you need to pay your cell phone bill before it gets turned off.
Bills, bills, bills. This is where the tools of budgeting comes in. Creating a spending plan allows you to see, in advance, what bills need to be paid and whether there will be enough money. So how do you budget? There are many budgeting tools that you can use. Here are ten tools that you can use to successfully budget your money so the next time you get paid, you can cover every bill and leave some money for entertainment and savings.
Budget Tool #1: Notebook Listing
This tool is the most simple way to budget. Begin by purchasing an inexpensive notebook solely for the purpose of budgeting. Or, you can purchase a notebook specifically designed for budgeting. In the front page of the notebook, list every monthly expense that you have and their due dates. This way, if you are paid biweekly, you will know what bills to concentrate on each time you receive your pay.
On the first line of the next page, write your next pay date with the amount that you expect to get paid next to it. Under that, list all of your expenses that you need to pay for that time period and their amounts. Once you have listed everything, start subtracting from your expected salary for that particular period. It is that easy. And best of all, if your calculation ends with a positive figure, you will know that you have money left for spending or savings. Use this for fun things like entertainment, but remember to save at least 10% of whatever is left over.
Budget Tool #2: The Envelope Tactic
Envelopes are a classic form of budgeting and require planning by paycheck. It includes having an envelope, preferably an accordion envelope. On each fold of the accordion envelope, write out each of your expenses and their respective amounts due for that particular pay date. Every time you are paid, withdraw the total of all of your bills due and insert the cash in their separate slots. You will most likely need a new envelope every pay day. Just to note, you can cut costs by purchasing these envelopes inexpensively at a convenience store.
Budget Tool #3: Spreadsheets
If you are familiar or an expert with Excel, this will be easy for you to do. You can also use any other computerized spreadsheet. Similar to using the notebook strategy, start by putting the pay dates over which you want to budget in each of the top cells (You can start with B2 to I2, for example). Next, in the A4 cell, type “income”, followed by subheadings for your income types under that. “Total” should be included after the income subheadings. Now, you should include your expenses. In cell A7 or so, type the word “expenditure” with subheadings of all of your monthly expenses, again followed with “total.” Proceed by putting in the figures, and Excel with automatically calculate for you. For further instructions on how to utilize spreadsheets as a budgeting tool, go to digitalunite.com.
Budget Tool #4: Mint
Mint is a free and easy budgeting tool that connects to almost every US financial institution connected to the internet. All you have to do is add the accounts, cards, and bills. You will also have access to see the money you have and the money you owe. Mint tracks your spending patterns, investments, and more.
Budget Tool #5: MoneyStrands.com
This software imports your financial information right from your bank accounts and credit card issuers. MoneyStrand allows you to schedule upcoming bills as well as view projections of the trajectory of your money.
Budget Tool #6: Acorns
Although Acorns is an investment mobile platform, you can also use this as a budgeting tool. Acorns has the feature that allows you to add money to your Acorns account. You can take advantage of this and transfer the money you have to pay your bills into your account. This way, you insure that you do not spend money that is needed to pay expenses. When it comes time to pay the expenses, simply transfer the money back to your bank account and immediately pay your bills.
Budget Tool #7: GnuCash
GnuCash can be used for both home and small businesses as a checkbook register. It is used to track income, spending, banking information, and investment and retirement accounts. The software allows you to input account details manually or download and import OFX files provided by most banks.
Budget Tool #8: My Spending Plan
My Spending Plan, similar to the envelope system, is an app which reminds you of upcoming bills. Once you personalize your settings, you can use this as a way to track your income and spending.
Budget Tool #9: Expense Bank Accounts
Depending on how many expenses you have, open bank accounts for each one. Set up your paycheck direct deposit so that each amount of the bill goes into its own account. This may require many different checking accounts, but at least you will be organized, leading a more budget-friendly lifestyle.
Budget Tool #10: BudgetSimple
Budget Simple gives you access to see where your money is going. The online program or app helps with the process of managing your money. It analyzes your finances, helps you create a budget planner, and suggests where you can cut expenses or grow savings.
These strategies of budgeting your money are wonderful and worthwhile tools to use. We now live in an economy where our expenses sometimes exceed our income and the process of budgeting will help us know what we have to spend. Prevent the stress of not being able to pay your bills on time and start taking charge of your financial future!