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Feeling a bit bewildered by your spending habits? You’re in luck! Here are several practical tips to help you manage your money more effectively. So, stop letting your wallet be the source of your woes. Follow these easy steps to build a budget that helps you realize your financial goals.  

Budget basics: Know your income and track your spending

It’s always best to start at the beginning. Start by identifying your net income each month, which is the income you take home after taxes and other deductions. A budget won’t be successful unless you have a sense of what you are being paid. The next step is to track your spending for a couple of months. As you track your spending patterns, you can start to group expenses by category.  

For example, your mortgage or monthly rent cost will likely be grouped with gas, electricity, homeowners insurance and other home-related costs. Additionally, your car payment and car insurance costs will naturally be listed in a section together. Other popular budget categories include groceries, entertainment, savings goals, subscriptions and more. Building an effective budget hinges on knowing what is coming in and what is going out. You can then start to adjust your budget once you have these elements in place. If you need help getting started, the Federal Trade Commission has a great budget worksheet for beginners on its website.  

Stick to a simple budgeting plan 

You need to be able to replicate and stick to your budget each month. NerdWallet offers a solution called a 50/30/20 budget. According to its budgeting tips, this rule allocates 50% of your income for necessities, 30% for “wants,” and the remaining 20% for savings goals or paying down debt.  

Necessities would include housing costs, transportation, insurance, utilities, child care and other recurring costs. “Wants” might include items like travel, gifts and dinner at a restaurant. Finally, savings can be used for the unexpected or for future goals. Additionally, if you currently have debt, you can use some of that money to start paying it down.  

If you can stick to a dedicated structure that works for you, budgeting can become much easier.  

Automate your savings

If you have set savings goals or money left over at the end of the month, consider setting up an automatic savings plan through your bank’s mobile app. This will help you save before money is spent on items you may not need and help you build and maintain the habit of saving. Check out this Business Insider article to learn more about automated savings.  

Once you’ve built up your savings muscle, you can start saving for your future and retirement goals. Indiana Farm Bureau Insurance offers access to financial products like annuities, Roth IRAs, traditional IRAs and more. Connect with us to learn more when you’re ready!  

Use a budgeting app 

You might get cold sweats just thinking about using spreadsheets. Keeping track of a budget on paper is not always a picnic either. Take advantage of the technology available to you and use a budgeting app to track your spending. Many of today’s budgeting apps can be connected to your bank account. That connection allows deposits and debits to be automatically tracked and accounted for in the app.  

If you need some suggestions, check out the Forbes list of best budgeting apps. Nearly 40 budgeting apps are described and compared in an easy-to-digest manner.  

Use cash to curb impulsive spending

Using a debit or credit card is easy, and that can be a problem. You may find yourself spending more money than you planned if you conveniently swipe for all your purchases. According to Investopedia, using cash for purchases can help you curb overspending.  

Using cash can make you rethink impulse purchases and help you keep track of your dollars and cents. As you get more comfortable with your budget, consider using cash for your discretionary or entertainment-based spending each week.  

Regularly review and adjust your budget

Review and revise your budget regularly. Things might change from week to week or on a monthly basis. You might get a raise or create new financial goals as you settle into your budget. A budget is an evolving tool to help you make the most of your hard-earned money. Experian provides great insights on why it’s important to revisit your budget and how to successfully implement budget changes.  

Final takeaway on building a budget

Starting a budget can be an overwhelming undertaking. However, you will only make progress by taking that first step in the financial planning process. Take a tip or two from this article and start your budgeting journey.  

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