Simply put, budgeting provides peace of mind. But it can seem daunting or hard to maintain, especially if you’re just starting out. Many believe budgeting will keep you from doing the things you want when really it should be the opposite. It’s all about creating a thoughtful plan of where and how to spend your money so you can do the things you want AND need.
To help make this task a little easier, we’re here to share our favorite budgeting tips for beginners.
Setting Budget Goals
Why do you want to have a budget? Is it to help save for your dream vacation or home, or to pay off debt faster? Knowing why can be a huge motivator when it comes to maintaining your budget. Don’t think you have to stop with just one. Having a few spread out over the course of a year (or even in the next few years) will keep you focused on the end goal.
Take Stock in Your Finances
The first step in setting a budget is knowing how much money you have to spend each month, so be sure to take stock of all your income sources. Income can come in various forms, whether that be a full- or part-time job, stocks and investments, or other passive forms. If you want to take it a step further, you can plan on using different sources for different things. For example, if you have a work-study job during the year and a paid summer gig, you can dedicate one for expenses and one solely for savings.
Every month may also be different, so be sure to account for any changes throughout the year, like birthdays, holidays, or car maintenance.
Planning Your Expenses and Savings
Expenses can be split into two main categories: fixed—payments that are the same amount regularly, such as rent or loan payments)—and variable–payments that can vary in amount and timing, such as food, utilities, or clothing. Your bank statement will give you a clear picture of where your money is going. You’ll want the top necessities from these categories to be at the top of the list to ensure that they are taken care of first. Don’t forget about any quarterly or annual expenses you may have, like taxes, renewals, or insurance!
One of the best budgeting tips is simple: start to plan before the month starts so you can begin with a clear set of directions. From there, you can start planning for other things, like your savings. Paying yourself within your budget is vital, and don’t feel like you have to save the same amount every month. Whether or not you have a retirement plan through your job, putting aside some of your income to use later in life is a great financial habit to start early on.
You’ll also want to create a buffer by setting aside money each month for unexpected expenses. If it’s something that you end up using frequently for a specific reason, that gives you the insight to add another item to your budget. If you don’t, it becomes savings or something you can use for fun.
Most importantly: don’t forget to factor in time for fun activities, whether that be going out to dinner with friends or splurging on self-care. By creating some wiggle room and not making it unnecessarily restrictive, you can take some pressure off yourself and make it easier to keep up with this habit.
Revisit and Revamp Your Budget Regularly
Utilizing tools can make it easier to keep up with your budget as well. Some of the most popular ones out there are Mint or Monarch Money. These will help you track how much money you have left for the month and help organize where you’re spending your money. Are you spending most of your money paying bills or on entertainment? Are you not using all the money you set aside for groceries?
Your budget can (and should) change over time, so don’t be afraid to move money from one category to another.
The Right Bank Can Make All the Difference
While these budgeting tips for beginners are a great way to get started, having the right financial partner can help provide the support you need to meet your financial goals. When working with First Seacoast Bank, you can trust that we will put you and your needs at the forefront of everything we do together. Contact us today!