Never Been Able To Budget or Save Money? Expert Help To Get Started

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If you have trouble budgeting, you might feel like you’re alone, but you’re not. This issue is actually a lot more common than you probably realize.

In fact, 46% of people lost at least $1,000 in the past year due to a lack of financial literacy — including not using a budget — according to a recent GOBankingRates survey.

“It can be overwhelming to build a budget or even think about setting aside money to save, but taking steps to better understand your finances can help you take control and reach your financial goals,” said Tom Holtam, vice president and senior regional delivery manager at UMB Bank.

The good news is, anyone can budget and save money with the proper tools. Here’s some advice to get you started.

Take It One Step at a Time

“When you first sit down to begin building your budget, it can feel daunting, but it is important to remember it is a really helpful tool and you can start small,” Holtam said. “While creating your budget, you will be able to see where you are overspending or where money is going out the door that you did not even realize.”

Make Your Money Work for You

For example, he said you might realize you have an extra subscription service you aren’t using or that your Friday night pizza habit is more expensive than you thought.

“Creating an honest and accurate budget can help you see where you might be able to cut back on a few expenses to save a little,” he said. “Even if it is just five dollars, that adds up.”

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Look For Small Ways To Save

“Set aside time to evaluate your spending history and identify areas where you could cut back,” Holtam said. “Redirect those dollars into your savings.”

For example, he said if you’re spending $100 per month on food delivery each month, breaking this habit can help you build funds faster. Additionally, he recommended buying store-brand products at the grocery store.

“In addition, be sure to cancel any unused subscription services or reach out to your insurance provider to see areas you can cut back on when it comes to aspects of your medical, car and home insurance you are not using,” he said. “Finally, if filling up your gas tank is draining your wallet, consider checking to see if your local gas stations or grocery stores offer loyalty or reward programs or see if one of your current credit cards has a specific percentage cash back reward for gas purchase.”

Make Your Money Work for You

Follow the 50/30/20 Rule

“Get a handle on reviewing your monthly spending and determining where you’re overspending and undersaving,” said Mary Hines Droesch, head of consumer and small business products at Bank of America.

When you get a better understanding of your cash flow, she recommended creating a budget using the 50/30/20 rule.

“Begin by taking 50% of your after-tax income to cover needs, like rent and utilities, [putting] 30% to wants — like dining out — and 20% to be put into savings,” she said. “If this method doesn’t fit your financial lifestyle, adjust your percentages to fit your current priorities.”

Automate Your Savings

“The key to building savings is to make it routine,” Droesch said. “By setting up automatic transfers to your savings account, you can consistently grow your savings without even thinking about it.”

After you’ve decided how much you’ll save each pay period, she advised paying yourself first, by automatically sending the amount to your savings account.

“For individuals struggling to save, this ‘set it and forget it’ savings method is an easy and quick way to build up your nest egg,” she said.

Make Your Money Work for You

Build an Emergency Fund

“I recommend saving anywhere from three months to one year’s worth of living expenses – or whatever you can comfortably manage – to act as a financial cushion between you and life’s unexpected events,” Droesch said. “Once you’ve established a savings rhythm, continue growing your emergency fund over time with regular contributions.”

She emphasized the importance of saving additional funds in a separate savings account, to avoid depleting your savings in the event of an emergency.

Ditch the Title

“Calling a budget by a different name can make a difference to the brain and the ability of the individual to actively participate with it consistently,” said Heath Carelock, AFC, MPS, PMP, founder & executive practitioner of Carelosophy Social Impact Solutions, LLC.

He suggested several alternate titles, including expense tracker, spending plan and weekly/monthly money organizer.

Stop Making Excuses

It’s possible you’ve had trouble budgeting in the past because you’ve been making excuses about your inability to budget.

Make Your Money Work for You

Carelock said some common justifications include assuming you don’t earn enough money to budget, your loved ones aren’t budgeting, you’ve tried and failed in the past and you do budget, but inconsistently.

“In each of these scenarios, it speaks to a person’s relationship with money,” he said.

These excuses can be caused by a variety of issues, he said. This includes a lack of confidence, role model or personal history with saving.

“In place of excuses, a person can focus on repetition, taking advantage of a financial coach for the sake of motivation and identifying positive affirmations to supplant an inner-negative voice,” he said.

Make Budgeting Your Mission

“Give your dollars a job for every specific type of expenditure in a weekly or monthly budget.,” Carelock said. “Give your dollars a future by continuing to identify the types of accounts that dollars can be assigned to, including savings accounts, online savings accounts, money market accounts and certificates of deposit, for starters.”

He also emphasized the importance of giving your dollars time to grow.

“Do this by not touching money that is strategically being saved or invested, or even intentionally being amassed to strike at your debt,” he said.

Make Your Money Work for You

Finally, he said it’s crucial to pledge to continue saving money.

“We give dollars friends by adding to the amount of commitment over time,” he said. “We bring more dollars to where our dollars are so that they can have a dollars party.”

He said this is accomplished by putting money aside in a savings or investment account. Along with not overspending, he said this will lead to residual income, which is money left between paychecks.

Following a budget isn’t always easy, but if you’re committed to the cause, you can do it. If you make mistakes along the way, learn from them and keep moving in the right direction.

More From GOBankingRates

Methodology: GOBankingRates surveyed 1,056 Americans aged 18 and older from across the country on between March 17 and March 20, 2023, asking twelve different questions: (1) When you were growing up, which financial topics did your parents talk to you about? (Select all that apply); (2) At what age did you become comfortable with basic money skills (i.e., writing a check, balancing your accounts, budgeting)?; (3) At what age did you start saving and planning for retirement?; (4) How much cash do you think you should have on hand in case of a national emergency?; (5) Do you think a lack of financial understanding has impacted your ability to be financially prepared for the future?; (6) How much did a lack of financial literacy cost you in the last year due to things like not knowing the best way to save for retirement, not being comfortable with investing, not using a budget, etc.?; (7) Which major financial task is most confusing to you?; (8) What percentage do you think you are required to put down on a home when buying?; (9) Do you feel prepared to handle any possible cuts to Social Security benefits?; (10) How has inflation changed how you handle your finances? (Select all that apply); (11) What’s the minimum you think experts would recommend you have saved to be comfortable in retirement?; and (12) Which of the following do you find most confusing about Social Security?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.

Make Your Money Work for You

Make Your Money Work for You

About the Author

Jennifer Taylor is a West Coast-based freelance writer with more than a decade of experience writing about anything and everything. Since earning her MBA, personal finance has been her favorite topic, as she’s passionate about writing stories that educate, inform and empower. Specifically, she specializes in budgeting, debt repayment, savings and retirement.
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