Once you earn money, you’re then tasked with doing something with it. Spending wisely isn’t necessarily an innate skill — and many people need budgeting tools to help them learn to manage their cash and to make informed, budget-conscious decisions.
So you can start making smart money moves, keep reading to learn effective ways to tackle your budget.
1. An Excel Spreadsheet
For people who want to create a tool that can help them plan out their financial future, take a cue from CPAs and accountants everywhere — create an Excel sheet. Although the learning curve for Excel might seem a bit steep at times, take advantage of a number of tutorials or premade budgeting templates to help you get started in creating your budget calculator. From there, plug in your numbers and let Excel do the rest.
2. A Notebook
A couple of the best tools to help you save are simply a pen and paper. Writing down everything you owe in one place, and doing some simple addition and subtraction is the most bare-bones — and sometimes, most effective — way to get a clear picture of exactly what your personal finances are looking like.
You can then take it a step further with a little exercise that has the potential to truly redefine your cash flow.
Arm yourself with last month’s bank statement, and in your notebook create two lists: “needs” and “wants.” Go line by line, marking which purchases went in which category, tallying up your total and what percentage of your pay went to which category.
If most of your cash went to the “needs” category, you’re off to a good start. If a surprising chunk went to “wants,” it might be time to re-evaluate what you’re spending your money on.
If you’re looking to take advantage of a high-tech solution for your financial management, look no further than Mint. Considered one of the best budgeting apps, Mint is available through Intuit and it takes all the guesswork out of budgeting. You link all your accounts — banks, credit cards, loans and more — and it breaks down your spending, showing you a clear picture of what your funds look like going in, how much is going out and where it all seems to be going.
Another benefit of Mint is that it offers both a free FICO score — so you can keep tabs on your credit health in addition to budgeting — and free alerts for when your bills are due, which will help you stay on track.
4. YNAB (You Need a Budget)
YNAB is a perfect fit for people who need something a little more in-depth than Mint — especially people who are trying to climb out of the debt hole. YNAB works similarly to other budget planners in the sense that you can connect all your accounts online and allow the software to do the work for you. But YNAB also helps you create and set customized goals; its website states, “budgeting isn’t about restriction. It’s about setting and reaching your goals. And then setting the bar even higher, and doing it again.”
Unlike Mint, YNAB isn’t free — it costs $6.99 per month, but the creators claim you’ll make your investment back in no time. New users save $600 by the second month and more than $6,000 the first year, according to the company site.
Another tech-savvy solution, Digit is a great companion to any budgeting strategy because it helps you build your nest egg without even realizing it. For many, one of the hardest parts of creating a budget is being diligent about setting funds aside for saving. With the help of Digit, you don’t have to hold yourself accountable — the app does it for you daily, without even involving you in the process.
Digit calculates the amount of money to set aside daily, based on your income and spending, then automatically saves that amount. “Most days it’ll feel invisible, but it won’t take long to feel like the future you’re working toward is within reach,” according to the Digit website.
6. The Envelope System
To head back to basics with your budget, this savings method requires one simple tool: envelopes.
Instead of giving in to the temptation of plastic, you do your dealings entirely in cash — and allow your budget endeavor to become tangible. By parceling out your funds into designated envelopes, your budget suddenly becomes very real. All it takes is one peek inside your envelope to see just how much you’ve got left for that category.
7. Savings Account
Another popular trick squirrels away every extra dollar into your savings account, which relies on the concept of “out of sight, out of mind.”
When you get paid, you’ll have a bottom-line amount of money you can leave in your checking account for all of your automatic withdrawals to go through, but the rest stays in your savings account. With your debit card rendered useless, you’ll be forced to make a trip to your local bank branch if you want to tap into those savings, which might be enough to put you off from unnecessary purchases.
Learn more: American Express Savings Account Review
8. Trimming Old Subscriptions
Another major tool to help boost your budget is to re-evaluate your recurring payment situation. Maybe you’re still paying $15 a month for HBO GO even though “Game of Thrones” isn’t coming back until next year. Or perhaps you forgot to cancel your Ancestry.com subscription after your aunt convinced you to revamp the family tree over Christmas.
Take a good look at those monthly payments you might have forgotten you’re making. If you don’t want to take the time to do it yourself, don’t fret — turn to an automated budget app, like Trim, that is designed to do it for you.
9. Tricking Yourself
This one might seem a bit unorthodox, but it works on a psychological level: Start using mind tricks to help you cut down on what you spend.
One popular trick is remembering your hourly wage and applying that to any purchase you’re about to make. Is that new blouse really worth three hours at your job? If the answer isn’t yes, walk away from that unnecessary purchase.