Being intentional with your finances can determine a lot for your life in the present and in the future. If you have goals of financial success and security, you need to have a working budget that you can understand and maintain. Creating a budget doesn’t have to be intimidating or limiting. It’s a matter of finding the method that works for you and in turn, leads you into financial success.
In this post, I plan to address the three parts of creating and maintaining a financial plan that works for you and those who may be dependent on your income. I’ve also included my favorite tools for budgeting!
In this post...
If left unchecked, money can be a topic that becomes a controlling factor in your life and emotions. Creating a budget gives you the ability to take control of your spending habits and be more intentional about the present so that you can prosper in the future. Understanding and following a budget reduces stress by knowing where and what your money is going to as well as being able to save for the future.
First and foremost, you need to list all expenses for the month. This includes any weekly, monthly, and annual expenses. In this case, consider any payouts as an expense. It is important to consider how much you will also set aside for savings and circumstances that might not be a regular expense.
Next, calculate all after-tax income for your household. This includes any paychecks (hourly, salary, commission, etc.), real estate gains, dividends, and basically else that might be generating an income of money for the family.
It is important to look at this objectively. Put aside any emotions that you have regarding your own finances and avoid being hard on yourself if you find yourself in a frustrating financial situation. Prepare your mindset to nurture a positive relationship with finances; always remembering your end goals!
Finding an effective method for maintaining your budget is one of the most important aspects of this process. Since everyone understands and processes things differently, there is no perfect method out there. Each method can be effective in its own way depending on how you process your own financial information. If you try a method and it doesn’t seem to work, try a different way. That way you can stay motivated and not give up on being in control of your money! Here are three great methods you can try with your budget.
The 50/30/20 method is a very popular way of maintaining finances and is rather easy for beginners since it is easy to understand. This method breaks down your expenses based on three precentage categories:
This technique of budgeting is extremely flexible and gives you a good starting point of how gain control of your finances. After a few months of recording your income and expenses, you can evaluate if you should make any changes to these percentages to create a more effective way of money management as long as the three numbers total 100%.
Zero-based budgeting is another popular budgeting method, especially among Dave Ramsey followers. The idea of a zero-based budget is that you have intentions for every dollar of your income, leaving no amount left undesignated. In my opinion, this method is the most intentional approach to money management. Each dollar has a specific job or responsibility. If you have allocated an amount to all of your essential needs and wants, the amount leftover can be reserved for paying off debts or investing.
It’s also important to note that with this method, you should allow yourself an amount each month for nonessentials. Of course, you don’t want to go overboard, but if you make an intentional plan to spend $50 a month on yourself (for example) you will be less likely to splurge without intention which could lead to spending much more, going over budget or creating more debt!
Reverse budgeting is my go-to technique for maintaining my finances. This method focuses on debt payments and savings first and then paying your recurring expenses. After those items are accounted for, the remaining money is used towards your wants.
I love this method of budgeting because our savings and debt payments are taken out of our account before we even have an opportunity to spend that money elsewhere. I go even further and breakdown our expenses into weekly payments that auto-draft from our account the day after our weekly income hits the bank. This helps us keep confidence that our bills are paid and the remaining money can be used for our wants. (Always within reason!)
Technology has made budgeting so much more functional and easy! I am the world’s worst about missing numbers and simple math when it comes to pen and paper techniques. I love a good spreadsheet or software that does all the work for me! A simple Google search for “budget spreadsheet templates” will lead you to endless options for Excel spreadsheets that can help you keep track of your budget. I used a spreadsheet that I created myself for years until I found an app that I really loved. I find it fun to create a spreadsheet, link data, and integrate formulas that allow me to plug in numbers and get results, but I also understand that that doesn’t work for everyone.
For years, I tried to find a program other than Excel that worked well for me. I wanted software that would cut down on the extra steps and limit the room for human error. I tried many popular apps, but found that many of them were not as robust as what I was looking for or either were more of a hassle than what I had time to figure out.
It wasn’t until I recently tried Quicken budgeting software that I said goodbye to my budget spreadsheets! Something that I love about this cloud-based software is that I can manage my budget from any device by downloading the app. Within the app, I have the ability to securely upload my bank transactions, classify those transactions, link bill pay accounts, connect credit cards, even directly link my auto loan. Also, I have the options to manage, forecast, plan, and generate endless reports to help me maintain and review my finances.
Maintaining your finances on a month-to-month basis is an important habit to establish. As you continue to record your expenses, you’ll be able to look back each month and see where you need to make improvements or adjustments. (Each month, my shopping category seems to need improvements! Oops!) Seeing your finances at a monthly glance can help you prepare annually and for long term debt payoffs. It is also a great way to create intentional investing and saving habits.
Below are affiliate links for software that I personally use and trust. These links help me earn money to maintain and grow my web presence.
As I mentioned before, I use Quicken’s software for all of my budgeting needs. Quicken is recognized as the #1 personal finance software in the US. Their software is a simplified, yet robust approach to managing your budget.
Simplifi is another #1 personal finance software program created by Quicken. This software is specifically tailored to 20-40-year-olds who are maintaining their current finances as well as planning for future investments. Things such as buying a home, preparing for retirement, and even saving for fun vacations!
I hope that these ideas can help you find a way to master your budget! Finding the methods that work best for you can take time. Stick with it and make adaptions to help yourself stay motivated and focused. While budgeting is serious business, find ways to make this routine fun and positive way to track your finances. Bring out the highlighters, stickers, and colorful pens! Whatever works best for you! If you feel overwhelmed, take a step away to clear your mind and come back refreshed and focused. Most importantly, always remember – never spend more than you make!
I'm a South Georgia girl making strides in the world with big dreams and a heart to serve others! I'm the champion of planning, organization, and being a perfectionist (hello, type one ennegram.) I'm really glad you're here!
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