Although budgeting is indeed more work, it pays off with many life-enhancing benefits. It ensures that you don’t run out of money. If you find yourself out of money, you’ll have a much clearer picture of your budget and will be able to adjust and make adjustments accordingly. You will also be able to track your spending as your monthly expenses are tracked over time. There are lots of free online apps like the ones found at https://www.sofi.com/money/ that can be used to track your spending.
Estimate your expenses
It is important to know how much money you will have in the future and your current expenses. The first step is to estimate your expenses. You can do this by completing an expense budget spreadsheet. Keep in mind that expense budgets should be designed for regular, daily expenses. For example, monthly expenses may not include holiday spending. Be careful to get this right or you may end up spending more than you planned.
Identify your money priorities
This is a personal preference, but what’s important for you is to identify your money priorities. What are the goals for the next few months and how does that help you budget. For example, in the past, we always purchased things on sale for a discount. When we do this, we know we have to pay the difference. We may want to purchase something now if we can find a better deal. Do you know what your money priorities are? Ask yourself, “Which are the most important expenses in my life right now, and how are they related to my current budget?” Once you have established a budget, be sure you have all the information you need to stick with it.
Keep track of your expenses Over the past year, I’ve kept a diary of my expenses, and I recommend you do the same. If you have a smartphone, take a picture of your receipts so you can compare them with your budget. You might be surprised how your income can vary depending on how you use your phone and other things.
You can also look back at a year’s worth of receipts and use that as a baseline against which to review your expenses. You can also download the app Simple for iOS or Android, which will automatically create a daily budget or take you on a grocery shopping trip.
The real challenge with keeping track of your budget is having the willpower to stick to your budget. Try it!