Happy Friday! As an INTJ with a very organized mom who used to work in banking, I can say that I sort of have a passion for finance and budgeting. In the past few weeks, with a new job and new financial situation, I've had to update my budget for my new income as well as my new savings goals, so I wanted to share how I did it!
As boring as it may sound, having a budget is so important, as is having a method of tracking your finances. It scares me so bad when I hear about people who don't know what's going on in their bank account because they're too scared to look.
Okay, so here's what I do right now to keep on top of my finances in the short and long term.
the zero-based budget // I love Dave Ramsey's 'zero-based' budget plan. The idea is that, at the end of the month, you should 'spend' every dollar you make so that you reach $0. That doesn't mean 'spending' like blowing it all at Sephora, but rather assigning every dollar to a category so that you don't have leftover money to waste on unnecessary things.
This technique really is the crux of my monthly budgeting strategy. I take my salary for the month and break it up into several categories (which you'll see below), starting with non-negotiable necessities (bills), recurring expenses (gas, food), savings, and spending.
factor in spending money // I just mentioned that I assign a certain amount of money to my spending category each month. I guess you could say its like giving yourself an allowance for things like going out to eat, buying clothes, and so on. By deciding on a set amount of spending for the month, you're able to maximize the amount you save without feeling like you have nothing left over for fun.
multi-phase budgets // If you have different savings goals or your income may change, it's a good idea to set up multi-phase budgets. To give an example, my two big financial goals right now are to pay off my credit card balance (which I accumulated during the expensive moving process) and then to save a decent amount for a trip to London in the spring. My first priority is paying off the card, so that's what my Phase 1 budget focuses on. After I've budgeted my necessities and spending money, everything else goes to paying off my balance. In a few months, when that goal is complete, I'll move on to Phase 2 where I will set aside a certain amount each month to go toward the trip and re-allocate the extra to other categories.
budget categories // So, here's an outline of the budget categories I'm currently using just as an example for what you can use as well.
- Monthly, recurring bills (car payment, car insurance, etc.)
- Gas, weekly
- Spending Money
- Savings Goals
budget tracking tools // I'm a pretty organized person, but I'm not the kind of person who has a big Excel document to track my budget. Honestly, my personal budget isn't super complicated so I'm usually good with just writing payment dates in my planner. However, I do like using Mint, which is a free, online budget service. You can connect all of your accounts so they can be managed in one place, set goals for yourself, and track your credit score.
What kind of budgeting techniques do you guys use?