First, it should be noted I do not think you are strange if you aren’t the best at budgeting. But I do think that sometimes people over complicate budgeting, so this post serves to simplify that. I got the following question on Facebook, and I’m sure she’s not the only one out there in a similar situation, so I’m offering up some tried and true budgeting tips for beginners {or those who have tried to stick to a budget numerous times and failed!}:
What “getting started” tips do you have for someone like me who has ALWAYS been horrible with money, who makes a budget but doesn’t stick to it, but is seriously ready to make a change and cut down on my families monthly expenses and grocery budget?
~Shalico
She’s not alone. Did you know that over 2/3rds of the country operates each month without any budget AT ALL. Wowza! Well I’m here to help change that with these tips:
- Get everyone on board! This one is SUPER important. If you are on one page and your spouse or family is on another, YOU WILL FAIL. Plain and simple. You need to have a sit down family meeting and go over your plan of action. Everyone needs to buy into your new budget so everyone can contribute to keeping you on track. Getting your spouse’s help and support is key though if you’re married. Work together to create a feasible budget.
- Speaking of budgets, create one. I know, I know. That’s the hard part. BUT it doesn’t have to be. In this How to Create a Budget post, I go over a super easy 50/30/20 budget that’s perfect for beginners. And then when you’re ready, here is a great Monthly Budget Tracker with built in categories!
- Go on a 30-day spending freeze. Try to go 30 days spending money on NEEDS only. That means ZERO wants. Here’s post on 15 Ways to Stop Spending Money that might help!
- For the first little bit, use CASH. This will hold you accountable. Set your household bills to auto withdraw each month and pay cash for the rest. Even if you are an online shopper like me, just buy yourself monthly gift cards, load money onto a prepaid Visa, or deposit money into your Paypal account. No money, no spendy.
- Get an app to track your spending. There are so many great {and free!} budgeting software tools right at your finger tips these days, but Personal Capital is my favorite.
- Cut down at the grocery store. How to Cut Your Grocery Bill in Half! and The Best Foods for Eating Well on a Tight Budget will help with that!
- Live a little more frugally. I know that sounds like a blanket statement, but it’s MUCH easier to budget when you have a little wiggle room. These post will help you achieve that: 20 Tips to Live a Frugal Life or 52 Ways to Save $100 a Month.
And there you have some great tips to get you started! Do you have any advice for Shalico?
~Mavis
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E in Upstate NY says
Each week we start with a set amount, in twenties. This is for daily items, including the occasional meal out, coffee, tolls etc. This is not for known monthly expenses i.e. mortgage, energy or other monthly expenses. Daily, coins get pocketed, and ones get pulled out. away from the weekly stash.
The ones are last to be used. If at end of week, there are any ones, they are put aside – also used for mortgage payments. If there are twenties left over, either the next week take fewer twenties or pay down a credit card or other loan.
ALL and I mean ALL coins at the end of day go into a basket in the bedroom. Once a month or so the coins get rolled. Those rolls are used when the mortgage is due, either lowering the amount paid, or like Mavis, helping pay down the principle.
Any system is always hard to start, let alone maintain until it becomes habit. Anyone trying to get spending under control, keep trying! It will work!
Amy says
If you believe you are going to fail, you are going to fail. Believe in your ability to make and stick to a plan.
Tracy says
Smartest thing anyone can do is take 90 days at minimum (I’ve been doing this for three years….) and write down every single cent you spend. On anything. Every single cent. If you buy a pack of gum, record it. Make a simple chart with pretty specific categories and just jot it down and total each column and the entire spend for the month. After a 3-6 month period, you’ll have a very solid idea of what you’re currently spending, and on what. A very exact idea. Then, identify what percentage of your total spend can be assigned to each category, e.g. car/home insurance, taxes, food, household items, gifts, RX, cable, cell phone or digital services, clothing, pets, etc. I live alone and am very good at sticking to a budget, have been all my life. But I must say, I was a bit surprised –not at how much I was spending but how much I was spending on a few of the categories, versus others. Armed with this information, I could make decisions on what amounts/percentages needed to go down and by how much. Without information, planning is not very useful.
KC says
I totally agree that first figuring out where you’re starting, and then planning, is more likely to be successful.
Another way of figuring out where you are (if you use mostly cards/checks to pay for things), in a much faster but looser way, is to go back over all your bank/card/etc. statements, for the previous year and note down a probable category for each purchase – grocery store to groceries, electric bill to utilities, etc. This is a bit harder if you can’t tell whether a drugstore purchase was candy or prescriptions or birthday cards or as-seen-on-TV novelties, but it can give you a ballpark for your general annual spending patterns and catch the once-a-year or twice-a-year expenses that are otherwise easy to forget (insurance! Christmas! summer camp! oil changes! dental work! registration! taxes!) so you can build them into your budget. I also endorse the record-every-item method for then identifying, in black and white, needs vs. wants within categories. That can tell you even more precisely how much is likely reasonable to cut, but a year of bank statements can give you a bird’s-eye view of where money is going, which can then be helpful as you zero in on what leaks can be plugged.
Wyoming Gal says
I find the “dole out the cash” or envelope system psychologically so wrong for me. I might average spending $1.50 in cash a week – maybe. Because of that I very rarely have more than $10 with me. Maybe when I had young children, a long commute, a demanding job and was working on a Master’s degree – maybe then I spent some cash that was impulsive. But now I like credit card rewards and very rarely buy something that isn’t planned in my budget. Even when I had college tuition bills to pay (mostly for my children, though some for me), it was all planned and we were able to use a credit card, get rewards and pay off the balance each month. I don’t believe most colleges will let you do that today.
Anyway, it is hard for me to understand why buying something with cash feels any different that using a debit card, check, or a credit card that you know you can pay off immediately. It has a similar impact on your wealth, though you do get frequent flyer miles or a cash rebate or other rewards if you use a credit card.
Lynne says
I’m basically frugal so I only buy necessities (including automatic retirement contribution and savings) in a month. Whatever is left, half goes in savings and half goes to next months wants. If the amount grows, or if I get a raise, I increase the automatic retirement or savings. If the amount goes down, I eat out less or find a way to earn more. I’m totally debt free 😉