Budgeting Made Easy
The topic of budgeting gets a bad rap, it’s a subject that many people would rather ignore and avoid talking about altogether. Why exactly people prefer to not think about budgeting is a mystery, but perhaps it simply boils down to lack of confidence in their own budgeting systems. When many people hear the word ‘budgeting’ they imagine pinching pennies like Mr. Krabs, and living on the bare minimum that they can survive on in order to save. However, budgeting doesn’t have to be that way. All a budget is, is the simple management of your money.
There are few things worse than opening up your bank account and seeing you have far less money than you thought, and you have no idea where it went. That’s a pain many of us have experienced. Having a simple and effective budget can prevent this, and allow you to save for a future without the need to eat ramen noodles every day.
Let’s take a look at some basic budgeting concepts that can set you on a path to financial security.
Zero Based Budgeting
Zero based budgeting is a simple and effective method to track and monitor your money. The concept is, that before a month begins, you assign a function to every dollar you have. This way, when the month ends, you will have spent, saved, invested or otherwise used every dollar you made that month, and end the month at zero. Of course, this may sound like you will be ending the month with absolutely no money at all, though that is a misconception. You simply assign a practical use for your money, and do not deviate from it. If you have assigned $100 for fast food, make sure that you spend that $100 on fast food, and nothing else. This means that at the end of the month you won’t be surprised by how much you spent at the McDonald’s Drive-Thru.
It’s incredibly easy to find yourself swiping your card for everything. The technological advancements on credit and debit card functions has made spending immensely more convenient than years past. However, this can also lead to overspending in a lot of ways, especially when it comes to non-essentials within your budget. Everyone needs entertainment and a small bit of ‘treating yourself’ every once in a while. Afterall, if you never use your money on yourself, you are likely to go crazy.
However, you should try reducing how often you use your card for these things. Instead, at the beginning of the month, take out an amount of cash that you are comfortable spending on ‘fun’ things, like shopping or movies, ect. Place it in an envelope labeled for its purpose, and once the cash runs out, you simply stop spending money in these areas. This will effectively help you to manage any overspending on non-essentials.
Oftentimes, budgeting is simply keeping a better eye on your money and how you are spending it. If you do not allow yourself to budget your money, it can easily run away from you. For that reason, establishing a budget can often be as easy as compartmentalizing your money, and resolving to not overspend in any category. You don’t necessarily need to follow any crazy spending regimine, or cut back on your spending and try to get by on the bare minimum just to save a buck. However, if you are able to keep track of where y our money is going, you can often manage your spending more effectively.
For smart budgeting, made incredibly simple, check out our app SaveMoney (subscribe for early access). You can be on your way to financial security in no time.