Ask an Expert – How do I budget? Where do I start?

Question

How do I budget? Where do I start?

Answer

Most of us have tried budgeting not once but many times during our lifetime.

Why?

We probably didn’t use a budgeting or tracking system that meshed with our personality. One size doesn’t fit all! In fact, there are many ways to track your expenses and more than one way to budget! Everyone has their own individual way of tracking expenses and budgeting and that’s why it’s so important to know yourself.

Are you a pen and paper gal, a spreadsheet nerd, or do you like using apps? There’s a method for everyone, and sometimes it just takes experimenting to find the right one for you. So how do you get started?

Step one is to track your expenses. Make it simple by spending a couple of minutes each day recording where you spend your money (this includes cash, too). Keep all of your receipts to make this easier. It’s important to track your expenses so you know where you are spending your money, on what categories.

Step two is to develop a budget. Once you have “data” you can make changes like saving more or paying off debt. When reviewing your expenses, ask yourself, “Did I spend more than I made or less than I made?” And the good news is, there’s more than one budget hack!

This is where you get to pick the one that works best for you:

1) Backwards Budget

2) Zero-Sum Budget

3) 50/30/20 Budget.

Whichever budget you choose, sticking to it is enormously satisfying. Telling your money where to go each month gives you feelings of control, power and independence. All the good stuff. 

Everyone has their own individual way of tracking expenses and budgeting and that’s why it’s so important to know yourself.