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For many of us, climbing out of debt or even getting in debt leaves us asking, “How can I get out of financial ruin?”. Even if you are living paycheck to paycheck, you might be surprised to find out that your financial situation could improve by spending less. Now before you say “thanks captain obvious”,  I want to point out that the key to spending less is to create a budget and track spending.

While I have created a guide that talks about budgeting paycheck to paycheck, I don’t think it addresses the root of the problem: Creating your initial budget can be very stressful and a bit of a chore. It’s like getting your drivers license for the first time, the process is annoying but you’ll never have to do it again.

My goal today is to provide simple tips for stress-free budgeting that can also be fun! Yes, you heard me, fun (fun not guaranteed). As long as you can get over the hump of budgeting you’ll be well on your way for financial freedom.

Baby steps my friends, let’s get to it!

Tip 1: Figure Out Your Goals

Let’s start here. The last thing I want you or anyone for that matter is to go off in a random direction and 2 months down the line they give up because “they lost focus”.  ‘Losing focus’ is not the root cause. The actual cause is ‘lack of proper direction’.

What do you want to get out of budgeting? Do you want to save up for a vacation? Do you want to see if you can save money period? Maybe you want to put extra money aside for retirement or simply pay off a high-interest debt. Whatever it is, pick any goal as that will be your guiding star.

You want to be achieving your goals. That means you don’t have to spend every waking moment looking at budgets or spend. If you have a goal of X amount saved, then you can make it a game to work towards it each month.

Tip 2: Track Spending For 7 or 14 Days

I already feel you cringe at tracking your actions for more than a day (it’s 2018, after all). But here’s the reality, you won’t be able to actually SEE how much you are spending until you see it in front of you. The moment you do that, you’ll soon realize that you can make changes that will actually make a difference.

You’ll soon realize that the $4/day coffee or the occasional lunch with coworkers can add up over $100 in extra spend (just as an example). But the reality is that these small charges do add up over time. For me it was realizing eating out for lunch most days of the week really put a dent in my wallet.

The key here though is that you can start seeing how you spend money.

Tip 3: Keep Tracking Simple

Before you dive too deep into tracking every penny (please don’t do that right off the bat, you’ll go crazy). You should put your spending under 3 or 4 main buckets.

  1. Utilities (phone/internet/cable/tv/etc)
  2. Shopping (coffee/eating out/restaurants/fast foods/makeup/entertainment/movies/etc)
  3. Basic Living (Rent/Mortgage/Gas/etc)

That’s it. People get discouraged when they go overboard and get too granular with tracking. It’s easy to get burned out when you have 30 different categories. There is nothing wrong with having many categories, but that’s is something you work up to. After a month or two you’ll start asking yourself, “why am I spending X on shopping?”, THEN you can track down where your spend is coming from.

Moderation is the key!

Tip 4: Use a Debit or Credit Card

I strongly urge you to start paying via debit or credit cards. While I love taking advantage of credit cards, paying by plastic will allow you to easily view and keep track of your spending. You don’t have to manually take notes of writing everything you buy, it’s all done for you.

Plus using plastic works really well with tip #5.

Tip 5: Use Easy Budgeting Tools (On Your Phone)

You can set up a Mint account right away and you can do it on your phone! All you need to do is connect to your bank account and credit cards and that’s it! Mint will automatically track where you are spending money and you can categorize your spend.

I spend probably 10 minutes a week updating my Mint account to make sure my spending is properly categorized. You also can create a budget within Mint as well so you can set up baselines. It’s very intuitive to use and makes budgeting painless.

Budgeting Chart Mint

One of many tools to easily visualize your spend

Tip 6: Remember To Save

The whole point of creating a budget is to focus on a goal. Most of these goals involving saving money or accumulating money for a purpose. It’s a lot easier to save money before you spend it. Example: You start budgeting and realize you should cut down on eating out. You save $300/month in doing so. You should immediately put $300 in your savings account so you won’t vulnerable to spending that savings.

The moment your money is put into savings, your brain does a great job of telling you that money should be used for your goal and not for something that could be considered wasteful. Overall, this should be done as a way to build strong financial habits.

Tip #7: Plan Around The 50/20/30 Budget

If you are left wondering, “how much should I spend in X category”, there is a great book called All Your Worth by Elizabeth Warren that keeps budgeting simple by following the 50/20/30 rule.

  • 50% of your budget is focused on the essentials/necessities (rent/food/etc)
  • 20% of your budget is for long-term savings (savings/retirement/etc)
  • 30% of your budget is for lifestyle (going out/eating out/etc)

What this does is that you have a baseline for you to adjust how you spend. Say you make $3000/month, you can say:

  1. $1500 is for basic living expenses
  2. $600 can be put into savings or an emergency fund
  3. $900 can be put into day to day lifestyle

Obviously, if you have debt, you can adjust where how much money gets allocated to paying that down. Again, it’s a good starting point.

Tip #8: Plan For Miscellaneous Expenses

Remember that you don’t need to track every penny when starting out. The reality is that when you start to budget, you might go over-budget in some categories and under-budget in others. You’ll also realize that random stuff happens each month that you weren’t planning for.

This means that budgets need to be flexible. I often keep a $100-$150 allocated for miscellaneous spending. Most months I don’t need to use it, but some months something random happens. (Case and point: My battery died on me in early July so I had to get a replacement battery, goodbye $180).

Does it suck? You know it. But since I’ve planned for some random shenanigans to happen, I’m able to keep my sanity and not get stressed about it.

NOTE: If you are asking yourself, ‘I wish I had an extra $100 lying around for expenses’ well stop pouting and get some easy money by filling out surveys. Swagbucks gives you $5 right off the bat and you can make $100+ each month on that alone.

The point is, budgeting itself is mainly used as a tool to help keep you accountable for spending. You don’t need to spend hours keeping tabs on your spend. It could merely be a 15 minute skim of your expenses weekly while you are watching Netflix.

What are your tips for making budgeting stress-free?

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8 Stress Free Budgeting Tips Graphic