I suck at keeping a budget, their I said it.
Of all the financial strengths I have, managing my budget is probably my biggest weakness. I’ve started a budget dozens of times with the intent to improve my financial situation and make it better but failed each and every time.
So over the last couple of weeks I’ve decided enough is enough, and decided to step up to the plate once and for all and face this challenge head on. Over the last week I figured out how to manage my budget better using Mint.com and as a result I’ve learned a lot. For those of you don’t know what Mint.com is you can check out my review of it right here.
So in this article I’m going to cover seven things I’ve learned on how to manage a budget better.
How To Manage Your Budget Better
Keep Things Simple. The first thing I feel that is so important to keeping a budget is that you keep things as simple as possible. I’ve found with all the other budgets I’ve had the moment I made things to complicated I would ultimately end up veering of course.
The best way I’ve found to do that is to use Mint.com simply because it does most of the heavy lifting for me. I’ve found anytime that I used a spreadsheet or program that requires me to input every single transaction I manage to find a way over complicate things.
Link All Of Your Accounts. On top of that I’ve also found that by linking all of my accounts into a great program like Mint it automatically brings in every transaction made with every account I have.
What’s great about this I can see every transaction made from one spot. So whether it’s an account transfer, a paycheck being deposited, or a withdrawal, I can see it all in one place.
Categorize Your Transactions. This brings me to my next tip on how to manage your budget better and that is to categorize every transaction you make. Being very specific with the way you categorize your transactions has everything to do with making your budget a success.
What’s great about Mint is since all of your transactions are already brought into the programs it’s really easy to label them correctly an know exactly how much you are spending in any given area. I should also point out that if you don’t categorize things right your budgets will be off so take the time to thoroughly categorize your transactions. Below is a picture of what my transactions look like when they are properly categorized.
Set A Budget For Everything. The next thing that is very important is to set a budget for everything you can. Budgets allow you to designate money towards each individual area of your finances. For example I have a budget for my television internet & phone, electric, gas, water & sewer, insurance, and groceries just to name a few.
I also budget for harder things that tend to vary a lot like doctor bills and health care as well. When it comes down to it set a budget for as many things as you can, this way it allows you to track the spending of those things as you go. Below is a sample of my budget looks like.
Monitor Your Trends. Another thing I learned from managing my budget this way is that it allows me to monitor trends within my budget over a long period of time. This way I can spot things that may have gone unnoticed over the long term.
For example, a few things I didn’t realize that I spent so much money on was things like the kids and natural healthcare stuff. Before keeping a budget I knew we were spending money in these areas but I didn’t realize how much it was. This has allowed me to look for other ways to lower the cost these areas and spend less overall.
On top of that I’m also able to compare things from month to month or from this month a year ago. So in a year from now I see how my spending has improved since I’ve started keeping my budget.
Set Goals. One area I’ve yet to dive into yet with Mint is setting goals, however I can already see the huge advantage to this already. Personally I have a lot of goals in life, I want to travel, I want to pay off my debt, I want to have an emergency fund, and I want to quit my full time job and start my own business.
The thing is all of this stuff takes planning and without a good plan in place most of these things will only stay a dream. With a budget it allows me to set goals to complete these task, and I hope to talk more about this as things progress.
Make It Fun and Work Together. Finally, most of all I feel you have to make things fun. Without that what is the point in doing all of this. I think running a budget requires both spouses to work together to make it work successfully. So when it comes to my budget my wife usually pays all the bills and I update the budget to make sure we are on track with our goals.
On top of that we are setting a goal to reward ourselves once we achieve a certain level of success. For example, one of my goals is to take a trip to St. Lucia which has been a goal of mine for a long time. So as a reward once we have completed several of our goals and improved are finances we plan to take a nice vacation to reward ourselves.
So what are you doing to manage your budget? Do you use web based programs like Mint or YNAB? Share your thoughts below.