Do you want to keep track of all of your expenses and income? Do you want to know how much you can save if you cut out some things from your budget? Are you looking for some budgeting tips for beginners?
Budgeting is a great way to keep track of all your expenses and income.
Whether you want to save money to pay off your debt, buy your dream house, or pay for a big vacation, budgeting allows you to reach any financial goal you are seeking to achieve.
You do not need to be an expert to start budgeting.
You do not need to be very good in math or to have hundreds of bills or monthly expenses to start with budgeting.
Budgeting is for everyone.
Budgeting tips for beginners: easy steps to a budget that works
In this post, I will show you some budgeting tips for beginners: easy steps to start a budget that works.
Benefits of budgeting
If you intend to start budgeting, you will notice changes in the financial area of your life.
Aside from taking advantage of the positive aspects of budgeting, your wallet will thank you so much!
There are disadvantages and advantages to budgeting, but we can confirm that the advantageous part outweighs the disadvantageous one!
Below, I will list some budgeting tips for beginners and the possible benefits you, your family, and your wallet can profit from if you intend to start budgeting.
Budgeting helps you determine how much you spend each week and month
Are you wondering how much you are spending every month or week?
Budgeting is a great way to set your weekly and monthly expenses goals and keep track of all your payments and earnings.
Once you start budgeting, you will have a clear picture of where all your money is going, as well as knowing where and how you’re spending it.
You will accomplish many things once you start budgeting.
For example, you will realize that the cappuccino you buy every day at the bar near your home is preventing you from getting a bicycle that perhaps would be more useful.
Or you will realize that the subscription to a channel that, perhaps, you no longer watch is taking away the possibility of paying for the holiday of your dreams, and so on.
In short, budgeting will help you understand what your priorities are and what, maybe, you could sometimes avoid to save money monthly or weekly.
Budgeting allows you to achieve your financial goals
I think many people’s dream is to reach a financial goal where they don’t have to worry much about money or in cases of emergency.
Let’s say you want to raise a specific amount of money until that date, or you intend to save to buy a car, pay for your parents’ dream holiday, or move to a villa with a garden for your furry puppy.
Or you intend to get your driving license or study in your dream university.
These are financial goals you have set yourself to achieve, and budgeting helps get you there.
Budgeting helps you not spend more than you should, which is a positive thing for your future, yourself, and your family.
I’m not telling you to avoid or not spend at all and not “enjoy life.”
I’m just suggesting you determine a fixed total of what you want to spend and what you want to raise so that you can reach your financial goal quickly.
Budgeting helps you to plan ahead
If you have goals in the future, budgeting is one of your best friends to help you achieve them.
For example, we know that Christmas is less than two months.
It’s a holiday where we know our wallets will be crying at the end of the month, not to mention New Year’s Eve, which is right after.
Budgeting is a way to start planning ahead.
Do you want to buy that Christmas decoration you couldn’t get last year?
Do you really want that family dinner full of tasty food that your family has always dreamed of?
Or are you planning to give a special gift to your parents, to your boyfriend or girlfriend, or your best friend?
Do you want to take a holiday to end the year?
These goals are achievable if you start planning in advance your expenses, as well as your income.
This way, you know how much you are spending and how much you have left.
And this is one of the best budgeting tips for beginners.
Budgeting eliminates stress and worries over money
Life is already stressful.
Between work, study, and family, stress accumulates over time. So why stress more about money?
If you’re a student, your biggest stress may be doing well in college and paying your tuition fees.
Budgeting reassures you that you have money set aside to pay for both usual and emergency expenses.
Let’s take an example. You found out that your best friend plans to surprise you and come over to visit you.
You don’t have to worry about whether you can take him to the playground, treat him to dinner, or pay for transportation around the city, as you already know you have an extra amount of money ready to use.
Another example would be medical expenses.
Do you need an extra prescription? Or do you have to pay for treatment or other medical expenses?
As you can see, budgeting helps you not worry as much about money.
Budgeting makes you stop overspending
Budgeting is a way to help you spend less.
This way, you will know how to manage your expenses and income.
You know how much you want to spend on each category and how much to save for your future.
Without a budget, you will tend to spend more.
For example, you would spend $100 more easily without a budget than when you have set a goal.
Budgeting helps you pay off debt
If your goal is to pay off debt, budgeting allows you to achieve this goal easily.
This is one of the best budgeting tips for beginners.
If you have school, private, or any other type of debt, creating a budget, maintaining it, and following it will help you achieve this financial freedom quickly.
Let’s say you have to pay a debt of $1000.
If you put aside $100, or $150 every month, in 10 months or less, you will have already reached the required sum and, therefore, paid your first debt.
Remember to set realistic goals.
How to set up your monthly and weekly budget
For a successful weekly and monthly budget, there are a few simple steps you need to follow to create a plan and an overall picture of your expenses and earnings.
Let’s see how to create a beginner-friendly budget with these budgeting tips for beginners.
1. Determine your net income
The first thing you need to do is to determine your net income.
Your net earnings include income from your job, whether part-time or full-time, your passive income, child support, any bonuses, and so on.
If your pay is hourly or you don’t have a fixed income, try to calculate an estimated figure and write it down.
Figure out how much money you receive each month because this is what you will later subtract from for expenses.
2. Plan your monthly, weekly, occasional, and yearly expenses
Plan and set budgets for your monthly, weekly, occasional, and annual expenses.
Weekly expenses could be groceries or petrol (if you use your car daily). Monthly expenses could be a subscription, electricity, water, or clothing.
Annual expenses include vacation, property taxes, yearly subscription fees, etc.
Write down your total expenses, for what, when, and how much you must spend.
You can create a budget planner using Canva.
3. Determine your monthly expenses (fixed and variable)
There are two types of monthly fees, which are fixed expenses and variable expenses.
Fixed expenses stay the same from month to month.
The probability that they will change is, therefore, very low.
Fixed expenses include gas, internet and cable bills, mortgage and rent, insurance premiums, property taxes, advertising, and entertainment.
Variable expenses are fees that change over time and include groceries, credit card payments, clothing, medical expenses, home repairs, birthday costs, childcare, or pet care expenses.
Determine these monthly expenses and create two separate lists. This way, you will not get confused.
4. Plan your savings
Budgeting is not just planning your expenses but also your savings.
Plan how much you want to save monthly or weekly.
Write down the amount you plan to save.
Remember to keep everything as realistic as possible.
Try not to deprive yourself too much, but at the same time, don’t overspend so that you can make ends meet with only ten dollars instead of fifty.
For example, if you want to save $100, write it down and try at all costs to save that amount. You don’t have to raise the same amount every month.
Based on your income and expenses, needs, and priorities.
5. Set a budget for each spending category
Create the categories you need and want to spend on.
Set your budget, write it down, and stick to it.
For example, if you don’t want to pay more than thirty dollars for a membership, write down the amount you’re willing to spend and expend only that amount.
Remember to choose cheap subscriptions that you make use of. Less is better.
6. Track and review your spending
Now that you have set your budgets, keep track and review each expense.
Keep your budget list handy and note any changes, such as expenses, income, and money set aside.
Use it as if it were a diary to update. In this case, however, an accounting diary.
7. Compare your monthly expenses
Now that you have updated your budgeting list, it’s time to compare each monthly expense.
For example, if you spent more than $500 last month, do the calculation for this month to see if you were able to save or not.
This is a little trick that helps you a lot to save money along the way.
- Housing (rent and mortgage, home warranty, home improvement, property taxes, etc.)
- Savings (short-term savings, retirement funds, emergency funds)
- Income (salary, side hustles, tax refunds, investments, interests)
- Debt (medical bills, student loans, credit cards, personal loans)
- Food (groceries, eating out)
- Health (insurance, life insurance, gym, prescriptions)
- Education (school supplies, books, tuition and fees, etc.)
- Personal (clothing, beauty, hobbies, toiletries, postage, etc.)
- Utilities (internet, trash, electricity, water and sewer, etc.)
- Transportation (public transportation, car, taxi fees, parking, fuel, etc.)
- Child and pet care (petsitter and babysitter, clothes, food, medicines, prescriptions, hobbies, etc.)
- Entertainment (gifts, movies, concerts, books, subscriptions, vacations, hobbies, etc.)
Questions you should ask yourself
- What are my goals?
- Do I really need it?
- How much am I spending on groceries?
- How much am I spending on personal stuff?
- Is there anything I can cut out of my budget to save money?
Common budgeting mistakes
- Setting unrealistic budget
- Not budgeting for emergencies
- Not tracking your expend
- Forgetting to write your budget down
- Not making a plan to pay off debts
- Forgetting to track and review your budget
As you can see, budgeting is easy and effective.
The steps to follow are simple and beginner-friendly. You don’t need to be a math genius to start planning your financial goals.
However, always set realistic goals, avoid the common mistakes mentioned above, and stick to your budgeting plan to reach your financial freedom quicker and without restricting yourself too much.
Are you ready to start your monthly budget plan? Follow these simple steps, and you will plan a budget that works!