Let’s be honest, there’s nothing exciting about making a personal budget. In fact, the task is so disliked that the majority of us choose not to do it. Unfortunately, this is a mistake. Individuals who track their monthly expenditures are five times more likely to achieve their financials goals. Paying off debts, saving for a large purchase, topping up a retirement fund or financing your child’s future educational needs are all goals that benefit from proper financial planning.
The overarching goal of a personal budget is simple, it’s a tool to minimize expenses and maximize savings. By reducing your unnecessary expenditures and increasing your savings, you can put your extra money towards important long-term financial goals, whatever those goals may be.
Budgets accomplish this by first, making you aware of exactly how much money you earn, and second, by drawing your attention to how you are spending your money. After creating a budget, you may be surprised to learn that your electricity and heating bills are 25% higher than your neighbourhood average or that your minimum credit card payment only covers the interest owing, failing to reduce your card’s actual balance.
Budgeting for Beginners
Budgets don’t have to be complicated. A piece of paper and a pencil is all you need to begin tracking your expenses. Write down your monthly household expense categories and tally each corresponding receipt, grouping expenses as you see fit. At the end of the month, evaluate your expenditures and decide if there are any categories in need of some fiscal restraint.
Your expenses can also be tracked using a spreadsheet, which you can save on your smartphone or personal computer. This allows you to easily update your budget throughout the month. For those who want to digitally track their expenses, the Money Management Template is an excellent Microsoft Excel spreadsheet that is free to download and use.
Budgeting for the 21st Century
Thanks to technology, budgeting no longer needs to be a tedious task. Apps like Mint, You Need a Budget and Simple make the budgeting process almost effortless. These apps can link directly to your bank accounts and credit cards, automatically tracking your expenses against a budget that you customize for your individual needs.
No longer do you need to manually record expenditures, they will tally your transactions and leave no dollar unaccounted for. Many budgeting apps also boast money saving tips and the ability to search through utility and mobile providers to find you the best deal, and thereby, reduce your monthly service costs. When combined with debt repayment and goal tracking features that help motivate you to reach your financial goals, it’s easy to understand why millions of consumers have embraced digital budgeting apps.
We hope this post has inspired you to rethink the value of creating and using a budget. Not only will you be able to more easily track where your money is going every month, you will be much more likely to achieve your long-term financial goals.
Do you use a budgeting app to track your expenses? Let us know in the comments section below. If you enjoyed this post, please subscribe to our Blog and follow us on Facebook and Twitter for news, updates and more helpful content!