Budgeting 101

Budgeting 101

By: Elise Gray - Posted in:
Man sitting down and budgeting for their monthly spending

Budgeting for Beginners: What is Budgeting?

Budgeting doesn’t have to make you anxious. Contrary to popular belief, budgeting can actually be fun once you get the hang of it. We have budgeting tips that can make life easier. Whether you’re planning to run a business or simply want to stop the free-fall plunge into the never-ending abyss of student loan and credit card debt, you’re going to need to practice some budgeting techniques at some point. As someone who has had both the luxury and pain of working in the banking world, I have some quick tips that will make the task easier for you.

Halt all doubt here. If my 18-year-old self could manage to muster up a $3,000 savings account on minimum wage (without starving to death), you should be fine. When it comes to budgeting, all you have to do is begin.

WealthHunters’ Budgeting Definition:
Generating wealth by living within one’s means and using the current systems in place to profit, not lose.

The idea of budgeting is often synonymous with restricting. Most of us already work 9-5’s and feel restricted enough, so why add on one more thing? I’ve got an answer: so you can escape. If you’re looking to start a budget, start with these items:

  • Calculate your net income
  • Evaluate your spending
  • Set financial goals
  • Devise a plan
  • Adjust your spending habits (if necessary)
  • Continue checking your progress

The Importance of Budgeting Monthly Expenses

Budgeting at Work Station Image

When we acknowledge the importance of budgeting monthly expenses, we set ourselves up for success.  However, more often than not, we go to great lengths to avoid budgets; whether it’s playing the guessing game at the cashing register or refusing to look at the bank account balance. People who are free have an immeasurable amount of two things: money and time. If you’re going to start freeing up some of your income, you have to carve out the excess that’s taking it up. Use our budgeting tips to learn more about your options and carve out your path to financial freedom today!

Wise Budgeting Tips to Follow

The road to financial recovery can seem hazy. Have no fear – we know you need information regarding the importance of monthly budgeting expenses:

Cut The Costs

A lot of us are over-paying for things, or we’re paying for services we don’t need. If you have Hulu, Netflix, and HBO – get rid of one. I know, it sounds painful, right? But if you’re swimming in $4,000 of credit card debt, watching a rerun of The Office every night isn’t going to get you out of it.

Another wise thing you can do is look at the bills you have to keep––phone, rent, gas, car, etc.––and see how you can argue them down. Do some research on your current auto loan rate, and see if you qualify for a lower payment somewhere else. 

Have you ever gone to cancel a service and been offered a lower payment to keep your account? It’s a thing. I’ve seen this trick work with my phone, gym membership, and even my Internet bill. I went from paying $90 for unlimited talk and text to $70, just by asking some questions.

When I went to cancel my gym membership for a closer location, my bill went down from $25 to $15 a month. I’ve been paying $65 every month for my Internet, and I wanted to cancel because I was moving – they offered me the same speed for $50 a month. The worst thing they can say is no!

Say No To Eating Out & Yes To Eating In

I can personally identify with the Carrie Bradshaw quote, “I keep sweaters in my stove.” But the fact of the matter is, eating at home is more affordable. If you’re budgeting, cut back. Avoid tips, food delivery services, and drinks.

Ask For Student Discounts (if applicable)

If you’re a student, ask about the discounts. There are different sites like Unidays, which offer college kids discounts on pretty much anything you can think of. Large online wholesalers like Amazon also offer student discounts on Prime memberships. Even your local movie theater has a discounted rate for students, so ask! If you’re looking to buy or rent textbooks on the cheap, this is the place to go!

Cancel or Hide Your Credit Cards

The financial advice I’ve ever received was from my grandmother, she said, “Never spend money that you don’t have.” If you have managed to pay your credit cards off, try and leave them alone. I know that it can be a difficult concept, but honestly, this is the wisest choice when one is budgeting. Debt is not a fact of life.

Rich people don’t use credit unless they’re using it as a tool. Why? They have enough money to live and buy the things they want. If you learn about budgeting, you won’t need to borrow money and pay interest. Understanding how to use a credit card as a tool rather than a means of survival is one of the most critical budgeting tactics one can know.

Consolidate Existing Debt

We lightly touched base on the concept of refinancing your car, but were you aware that you can essentially do the same thing with your existing credit cards? Consolidating is a different type of budgeting.

If you have large balances that you can’t pay off in one swing, look into consolidating your cards into one monthly payment. Most people don’t realize that when you consolidate credit card debt, you’re exercising one of the best budgeting tips out there!

Budgeting comes in many forms. Instead of throwing $1000 at your credit card every month, only for the balance to barely go down, consolidate the card balance into a personal loan. 

Get an App to Track Your Expenses For You

Budgeting tips can be free and optimized, you just have to know where to look! Whether you plan on downloading Mint or Credit Karma, you’ll be happy to know that there are loads of free applications out there that can tell you exactly what you’re spending on what. 

Since I bank with Wescom Credit Union, I have access to their eBudget tool. Their tool helped me pay off a $2,090.11 balance in two months by breaking down what I spend my money on every month. I was able to break down the amount of leftover money I had left and use it toward my savings.

I also use Bank of America’s Savings Goal Calculator, which helps me calculate how much (and how long) I need to save to reach my savings goal of $20,000.

Be Reasonable

When it comes to budgeting tips, being reasonable is very important. The 50/30/20 rule is a plan that some people like to follow. In a perfect world, it sounds reasonable, but unfortunately, cooker-cutter budgeting doesn’t always work.

If you live in a large city as I do, then you know that a large chunk of your paycheck goes towards your rent. When you can’t afford to make the 50/30/20 rule without semi-starving, don’t! You know what you’re saving for, so do some research on how much it would realistically cost you to do so.

All in all, budgeting doesn’t mean that you have to stop living your life. Having a budget is merely a way to shop smarter and save more while you’re doing it. Not to mention budgeting is one of the key personal finance skills you can develop to achieve financial freedom.

Hopefully, with these tips, you’ll find that you can one day break away from the standard 9-5 and start living your best, debt-free life. If you still have questions about the importance of budgeting monthly expenses, browse our site and learn more about our budgeting tips and debt crushing tactics.

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