If you’re just starting to really get into budgeting money you may be in a bit of a frustrating situation.
You want to be an absolute professional, but you don’t know where to start. Don’t fall into despair quite yet.
Becoming a total mastermind at budgeting takes a little bit of practice and patience, but if you follow these steps, you’ll be an expert budgeter in no time. Here are our four tips on becoming a budgeting mastermind.
1. Sketch Out an Executable Budget
Step one is looking at your finances and figuring out what your ideal realistic monthly budget is, then comparing that to your current spending habits.
Doing this smartly means figuring out the minimum and maximum amount that you could spend on a particular expense and using that number as a baseline.
When you build out an expense vs. income budget, you may want to set a few more general goals like “I want to put x amount of money into savings each month.”
Give yourself some wiggle room, but make sure you have something that you’re working towards; this will act as a reinforcement tool to keep your budget goals on track long-term.
2. Figure Out Where You Overspend
In the process of looking at your spending habits, you’ll almost definitely find a number that will shock you in some way, shape, or form.
It will leave you thinking, “How did I spend this much on THAT?” Don’t be alarmed; it’s common to misspend in at least one way.
The positive is that you’ve found the problem area, which means you can take small steps to spend more conservatively and end up with big savings.
3. Reduce Inessential Spending
Some costs are unavoidable: You need to buy groceries, you need to pay your rent/mortgage, and you need utilities like electricity and Wi-Fi.
But when you start budgeting, look at some of your inessential spends; things like eating out multiple times a week, impulse buying, and excessive shopping can seem like a relatively small amount of money in isolation.
If you’re consistently indulging in some of these behaviors, it can very quickly add up.
That doesn’t mean you should never eat out, go splurge on some nice clothes, or buy new headphones, but it does mean you should probably do so less frequently than you are — especially if you’re finding that this “unnecessary” spending is becoming a budget burden.
4. Use a Budgeting Tool
Technology and processes have become mainstream across the board.
New apps and technology have made budgeting much easier. Institutions have pushed for more tools that help their customers and members.
HRCCU offers an in-app budgeting tool, called AllData PFM. This was in part designed to help customers budget better, using a part of the tool called the budget wizard.
It also contains other features like expense categorization, a financial dashboard, and customized spending alerts. All of these features can help you get a jumpstart on becoming a mastermind budgeter.