If you came here because you want to learn how to budget your money, you’re in the right place. In this article, I’ll cover beginner budgeting tips to help you get started with monthly budgeting.
After reading through these budgeting tips, you should have an idea on how to get started and where to look next. You CAN teach yourself how to budget. It’s easy. Stick with it and you’ll be mastering your budget in no time at all.
Getting Started with Monthly Budgeting: Follow these beginner budgeting tips
When you’re first getting started with budgeting, you might feel overwhelmed or discouraged. Don’t stop trying to learn. Budgeting is one of the most important activities you can do if you aspire to be a millionaire someday. According to the book The Millionaire Next Door, the majority of millionaires have a budget. Be like them.
You will have a hard time accumulating wealth if you don’t have a budget. It’s simply too hard to track your spending without one.According to the book The Millionaire Next Door, the majority of millionaires have a budget. Be like them. Click To Tweet
Budgeting is one of those little things you should be doing everyday. Little things may not seem like much, but they add up over time. By doing the little things right, you’ll score some big wins down the line. Budgeting is an important life skill required to build wealth the right way.
Through hard work and following these beginner budgeting tips, you can get yourself started on the right track.
Tip #1: Start a detailed budget
If you found this article, you’ve been searching for how to learn budgeting. That’s the most important first step. You’ve figured out what you don’t know.
Even better, you may have already started a budget previously, but you’ve found it was too hard to stay consistent. Budgeting is hard if you don’t know how to keep going. You may have found you had a hard time estimating how much to budget in each of your spending categories.
I’ve been in your shoes before. I tried to use Mint to start a budget and it simply didn’t work out. For whatever reason, Mint’s budgeting tool was lacking. It didn’t motivate me to make budgeting a habit.
Then I started reading about the things millionaires do to reach their millionaire status. Budgeting is the key. If you want to be a millionaire, you must budget your money. You must know where you spend your money.
Related Reading: Conflict Free Budgeting for Couples: 5 Steps to Avoid Money Fights
Tip #2: Use a spreadsheet or a paid software program
As a software nerd, I love software tools. There are tools out there for anything you could imagine.
Use software to start and keep your budget. If you’re like me, you have a computer and you keep your smart phone with you at all times. By using good software, you can budget at home and on the go.
Great budgeting software will even have a mobile app. Use the app to keep track of your budget as you spend money. My favorite budgeting software is YNAB. It’s the one I use every single day. It’s $5 per month, but totally worth it in my eyes.
List of Commonly Used Budgeting Tools
- Level Money
- A Custom Spreadsheet
Tip #3: Keep your budget updated
Budget everyday. Make budgeting a habit. Each time you spend a dollar, you should reach for your smart phone and enter the transaction.
By doing this, you’ll become attached to your money. You’ll start to know how much you spend per month on certain items.
Here’s the best part. You don’t need to spend much time doing this. After awhile, entering transactions will become second nature. You only need a few minutes every day to check your budget and keep track of your spending. Don’t let it slip. Keep your budget updated every day.
When my wife and I started budgeting, it took us awhile to get in this habit. Now, after repeated practice, we keep our budget updated daily. It only takes a few minutes of our day to make this happen, but it’s the best feeling in the world. We know exactly how much money we’ve spent and how much money we have left.
Tip #4: Don’t get discouraged
It’s impossible to estimate an accurate budget. If you could accurately predict your budget every month, you have the ability to predict the future. And if you can predict the future, I recommend that you stop reading this blog, move to Las Vegas, and make millions of dollars betting on sports.
Since it’s so hard to produce an exact budget each month, don’t expect to do so. On some categories, you will be under your budget. On others, you’ll be over your budget.
That’s ok. Don’t get discouraged. You want this to happen. You want to constantly be updating your budget. Life happens. You can’t always predict when expenses pop up.
If you go over your budget, borrow money from another category. If you go under your budget, use that money for other categories or budget that money for the future.
I constantly forget about little purchases each month. As a result, my wife and I are constantly updating our budget. Money moves around a lot, sometimes on a daily basis. Over time, we make better guesses, but we’re never exactly right.
Tip #5: Know your categories
Budgeting categories are important. Categories help you keep track of spending over time. For example, most people keep a category for their rent or mortgage. At the end of the year, you’ll find it easy to see how much you spent.
If you like snowboarding, you may have a category solely for snowboarding equipment and trips. If you like golf, you’ll likely have a category for tee times and golf accessories.
Your budget categories might be different than others and that’s a good thing. Your categories should be personal to your situation. Remember, categories give you clarity around your money.
If you’ve never budgeted before, you had one category: My Money. Without a budget, you don’t have data to refer to. It’s difficult to know how much you spent on groceries last month or how much you spent on gas in the last three months.
Once you start budgeting, this will change. You’ll have many categories. You’ll have categories like mortgage, groceries, utilities, student loans, dining out, car maintenance, and much more. Your categories will change over time as your life goals are updated.
Budgeting is a fluid exercise, so keeping it up to date takes some work. Be willing to adjust your categories as things change.
Common Budgeting Categories
- Credit Card Payments
- Immediate Obligations
- Mortgage or Rent
- Car Insurance
- Car Payment
- True Expenses
- TV, Netflix, etc.
- Auto Maintenance
- Home Maintenance
- Stuff you forgot to budget for
- Debt Payments
- Student Loans
- Medical Debt
- Quality of Life
- Christmas Gifts
- Health & Fitness
- Just For Fun
- Beer & Liquor
- Dining Out
Related Reading: Future Millionaire Tools: 29 Valuable Tools You Can’t Live Without
Tip #6: Think about your money months ahead of time
One of the greatest parts of the budgeting mindset is thinking ahead. What do you need to buy three months in the future?
By using a budget, future planning becomes much easier. Budgeting makes you stop and think what purchases you have coming up. For example, when you budget, you should budget for your car’s oil change ahead of time. If you do that, you won’t be unprepared when you need an extra $35 for routine maintenance on your car.
When you sit down and budget, ask yourself: Can I think of any purchases I need to make within the next three months? Most of the time, the answer will be yes.
Make an effort to get ahead of your finances. Budgeting will help you break out of the paycheck to paycheck cycle.
When I first started budgeting, I had no idea how much runway I had in my bank account. Could I survive for two weeks without a paycheck? If I couldn’t work anymore, could I last three months? With a detailed budget, I always know that answer.
Armed with my detailed budget, planning vacations and paying off student loans becomes so much easier. Think of your budget as your comfortable pillow – it’s information that helps you sleep at night.
Tip #7: Plan for big purchases
Since budgets help you plan ahead, planning for large purchases becomes quite a bit easier. For example, you can use your budget to help plan a vacation.
With the right budgeting software, you can set goals. Using goals, you can give yourself a target to meet every month. Here’s an example:
Let’s say you need to save $2,000 for a vacation. Since you’re thinking to the future, you’ve started planning for the vacation 12 months ahead of time. Using your budgeting software, you set a goal to save $2,000 in your vacation category within 12 months.
To reach your goal, you’ll need to save about $167 every month for 12 months. Suddenly, going on vacation seems a lot easier. You’ll set aside money each month and when it comes time to book your vacation, you’ll be all set.
My wife and I used goals to fund our vacation to Colorado to go snowboarding. We planned the vacation 6 months in advance and saved a little bit of money each month. Trust me – it feels so much better knowing you already have the money set aside.
Plan your big purchases ahead of time. If you know you need to save $100 to stay on track for your vacation, you’ll be less inclined to spend it. Put the money aside in your vacation category and forget about it.
Tip #8: Expect emergencies
With the right budgeting software, you may not need an emergency fund if you do it right. By budgeting toward future categories, you’ll be creating a built-in emergency fund.
For example, if you start setting aside money for car repairs each month, you’ll build up a small emergency fund for car repairs. Most of the time you won’t need that money, but it’s there when you need it. When a major car repair is required, you’ll have a significant chunk of change to use.
Sometimes the money you’ve built up in a category won’t be enough to cover emergencies. That’s ok. With the right budgeting mindset, you can make adjustments and borrow from other categories. Having some money set aside is better than zero and the financial hit won’t hurt quite as bad.
Tip #9: Review your progress
Whether you’re using a spreadsheet or some other fancy budgeting software, reviewing your progress is one of the best things you can do. Since you’ve been tracking your spending, you get to see your spending habits over time.
You’ll find budget review rewarding when you see your spending stayed consistent over an entire year. Most likely, you’ll see you stayed true to your budget and didn’t compulsively spend. Those moments will be highly gratifying. You’ll know you gave yourself a valuable life skill you can pass down to your children.
On the other hand, you may find some bad spending habits. If you aren’t happy with the results, you can learn from them. Make adjustments. Review your budgeting history with a fine toothed comb and set goals.
Tip #10: Roll with the punches
Budgeting isn’t perfect. That’s the idea. Life can be chaotic with little expenses popping up when you least expect it.
Develop a boxer like mindset. When life throws a punch, deflect the blow and move on with your life.
Use your budget like a shield. A shield doesn’t prevent bad things from happening, but it surely helps you defend yourself. A budget will do the same. Knowing exactly where you spend your money is the first step toward reaching financial success.
When you budget, you’re preparing yourself ahead of time. You’re expecting the punches to come eventually, so you plan ahead. That’s the beauty of it.
Millionaires budget. It’s that simple.
If you want to be a millionaire, start a budget. Just do it. Don’t wait.
Your budget doesn’t have to be perfect. In fact, I’ll be the first to tell you that your budget will suck at first. I know mine did. When I first started the budget, our grocery category was a complete guess. I had no idea how much my wife and I spent on groceries.
You will get better at budgeting over time. Practice. Start budgeting every single day. Turn budgeting into a habit. Don’t skip. Force yourself to review your budget and soon you’ll form a great habit. A habit which will stick with you for the rest of your life.
If you budget, you will find more ways to save money. As humans, we love games. Our minds love to win. Your mind will start turning budgeting into a game. You’ll see your spending decrease across the board until it reaches its normal levels. You might become addicted to it.
Last but not least, ask for help if you have trouble. I’ve been budgeting for a long time now and I feel like budgeting has changed my life. I’ll never look at money the same way. Feel free to send me an email if you have questions on how to get started budgeting. I’ll do my best to help you.
If you just started budgeting, I’d love to hear from you. What do you like most about budgeting so far?