If you are like me, math is not your favorite thing in the world. And when it comes to balancing a checkbook . . . no thanks! Making a fast and easy budget sounds like the hardest thing ever.
Muddling through piles of bills, checks, and other papers sound like a bit of a nightmare. That's why so many young adults put off creating a budget and hope they don't end up on the street. Luckily, making a fast and easy budget is not just a fantasy!
With the right tools and a little patience, figuring out your finances is pretty easy. In just a few quick steps, you can figure out how much you make, how much you spend, and make a plan for your financial future.
Not sure where to start with creating a monthly budget? I've got you covered. I'll even tell you about an awesome service that can help you do it all for those time-strapped ladies out there! Follow my tips below to learn how to make a fast and easy budget.
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Know Your Actual Income
Sure, you know how much you are making in total each year, but that does not reflect what you really take home. Between retirement plans, taxes, and other deductions, many of us see a much lower number on our paychecks than on our contracts.
On the other hand, you might be making more money each month than you realize. Between odd jobs, side hustles, and investments, many of us have more than one source of income. To find out how much money is really coming in for you, you have to add up all your sources of income and jot down the total.
What's the bottom line?
Though it sounds simple, figuring out exactly how much money you have in your pocket each month is key to creating a fast and easy budget. Once you know what you are actually working with, you can make more realistic financial goals and spend more wisely, too. (Wise Bread)
Track Your Expenses
The second step of making a fast and easy budget involves figuring out how much money is going out of your accounts each month. Finding out how much money you actually spend can feel scary at first, but it's so important. Otherwise, you won't know if you are spending more than you make!
First, take a look at your fixed expenses. These are bills that are going to stay the same (more or less) every single month. Think your car or student loan payments, rent, and insurance. When you get paid, these expenses are the first thing you should pay for.
Many financial experts say you should consider savings as one of these fixed expenses. This is often referred to as “paying your future self.” Even if you can only afford $10 or $20 a month towards your savings, having a bit of money squirreled away can really help you in a pinch later on.
The easiest way to calculate your total monthly expenses is to save bills and receipts. Just tally up the totals and you know how much money is going out each month! Lots of people (including me) find it easier to understand by putting these numbers into a spreadsheet. That way, you can just put in an equation and it does the totaling for you!
Don't Forget The Variable Expenses!
You probably remembered to jot down the cost of your car payment, rent, and Netflix subscription, but what about your less predictable expenses? As I mentioned above, the bills that stay the same exact amount each month (or week) are called fixed expenses. They are easy to budget around because they never change.
On the other hand, we all have a lot of variable expenses, too. These are things you spend money on that don't always cost the same amount. Variable expenses can include entertainment, clothing, and even your electricity bill.
How much you spend on variable expenses depends on your choices. For example, your grocery costs aren't the same from month to month because you may choose to treat yourself to a pint of ice cream one week or throw a party that requires you to buy more food than usual.
It is easy to forget these expenses when you're making your fast and easy budget because they might slip your mind at first. You don't get a bill in the mail every time you need to buy more toothpaste or grab a cup of coffee on your way to work. This includes shopping online. However, for many of us, variable expenses make up a large portion of our expenditures, so keep track of them!
Want to learn more about the difference between fixed and variable expenses? Check out the super simple and helpful video below.
Balance Your Numbers
Now that you know how much money is coming in and going out each month, it's time to do some math. Yeah, it's not the most fun thing but it's the most important step in creating a simple home budget! Add up all of your expenses for the last month and subtract that number from your total income. It's that easy!
If your number comes out positive, that's awesome! That means you aren't spending more money than you make. In this case, you can decide what to do with that leftover money. Do you want to start saving for a vacation? Would you like to put it towards loan payments to pay them off sooner? Maybe you could start an emergency fund. It's up to you how you put your surplus to best use.
On the other hand, if your number comes out negative, it's time to buckle down. Take a look at your expenses and find out where you spend most of your money. This is where wants and needs come in. Go through all of your expenses and decide if they are a want or a need. For instance, your rent is a need but your Seamless orders are wants.
Then start slashing through your “wants” until you can pay all your “needs” and still come out with a positive number. This might sting at first but it can really get your finances on track. No one is saying you can never go out with friends or treat yourself, but you have to get realistic about how much you can spend on fun stuff (Life and a Budget).
Stick To It!
Making a fast and easy budget is important, but it's all for nothing if you don't stick with it! That is why you need to create a plan to keep yourself on track. Everyone has different methods for this, so find one that works best for you.
One tried-and-true way to stick to your budget is to keep the amount of your fixed expenses in your checking account and take out the rest in cash. This way, you can literally see the money going away as you spend it on variable expenses.
To ensure you don't blow it all one place, divvy up your cash into jars or envelopes. Mark each one with a different expense like “groceries,” “transportation,” and “entertainment.” Once the cash is gone for the month, it's gone!
But there's a catch.
Each envelope shouldn't have the same amount of money in it because obviously eating is more important than going to the movies. Want help deciding how much to put in each jar? Use this interactive budget worksheet from personal finance expert and best-selling author Gail Vaz-Oxlade.
Want more Gail? Check out her books It's Your Money: Becoming A Woman Of Independent Means (revised E and Debt-Free Forever: Take Control of Your Money and Your Life!
Make Some Changes
Your fast and easy budget is made and you have financial goals in mind. Now what? Just because you have a pretty spreadsheet doesn't mean the numbers on it are any different. Now is the time to consider some lifestyle changes to make money less of a stressor.
I know I discussed slashing “wants” from your budget previously, but striking them from the spreadsheet won't do much unless you make a plan to carry them out in real life. Cancel that subscription box, invite friends over for drinks instead of going out, or start making coffee at home before work. The financial peace of mind will outweigh the fun or convenience of this stuff, I promise!
There are also ways to change up your “needs.” For example, if you love your apartment but it's way too expensive, consider getting a roommate to offset the cost. Or if you don't want to give up driving to work, buy the cheaper kind of gas when you fill up instead of premium.
On the other side of the coin, if you don't want to give anything up, you can always find new ways to bring in more cash. Start a side hustle, pet sit for a friend, grab some overtime hours. You have to werk if you want that money, honey!
Spending less money on random things also makes it easier to keep your budget balanced. The fewer times you grab fast food or drunkenly online shop, the fewer numbers you have to crunch later. Be smart with your spending; it will make dealing with your money so much easier!
Get Some Help From Invibed
Here's the thing.
I know that even with my super quick and simple tips, some of y'all still don't want to make a budget. If you're like me and aren't friends with math, this important task can seem like a nightmare. Luckily, there is a way that you can create your personal budget planner without wanting to rip your hair out.
Invibed is a service that takes the guesswork out of budgeting. This online service connects you with finance experts who can help you create a budget that works for your future goals. Do you want to pay off your student loans? Are you trying to save up to buy a house? Is credit card debt haunting you? They can help.
This service uses online video lessons, helpful planning worksheets, and private one-on-one wealth coaching sessions to get you where you want to be. Whether you simply want to create a fast and easy budget that gets you where you need to be financially or you want to learn how to make your own wealth, there's a program for you.
Invibed not only helps you figure out how to meet your immediate financial goals but also gives you a full education in money management. You will learn about credit, loans, investing, budgeting, and more! Plus you can always ask your wealth coach any specific questions you may have.
I don't know about you, but actually sitting down and dealing with my finances isn't my cup of tea. But it is an important part of adulting that has to be done! No matter how much or how little you know about money, I hope these tips for creating fast and easy budget helped you out.
Making a budget is a lot easier than it seems. Just add up your sources of income and subtract your total expenses from that number. Then, make a plan to meet your financial goals and needs! If you really don't have the time or energy to deal with your budget, sign up for Mint and they can do all the hard work for you.
What are your tips for creating a fast and easy budget? Did I miss any important steps? Would you use Mint? Let us know in the comments below!