Are You Waiting for the First Day of a Month to Start Budgeting? Don’t. Here’s How You Can Start Now
The truth is that you are only setting yourself up for failure by postponing any action on your present financial state. Without proper monitoring, things will only get worse tomorrow, next week and next month. So how can you start managing your money and regain control on what it does and where it goes? Just that — actually start. Today. Now.
You don’t have to be a math expert, an accounting genius or a tech geek to start budgeting. You don’t need to set aside huge amounts of time every day, week or month to tally up your finances. And, most importantly, you definitely don’t have to wait till the first day of a new month to start a budget.
Budgeting is not rocket science. It is only a tool that gives you a better and clearer picture of your finances.
When you know what exactly your money is being used for, it becomes easier to track your spending, set goals and achieve them.
But Before You Begin…
The first step is to dispel the one major myth most of us have believed for long, which is that a budget is restrictive.
Think back to the times when someone in your group backed out from an outing claiming that they’re “living on a budget”. Sounds as if they’re cutting back on something or like they’re restricting themselves, right?
That’s where the problem lies.
We always tend to associate the word budget to cutting back. The truth is that budgeting is anything but that.
Instead of dictating terms to you or restricting your spending habits, a budget gives you control over your finances. A budget helps you sort out, prioritise and spend on things that matter more to you. It is not about forgoing or sacrificing things you love. It is about being smart with your money and managing it in a way that will take out stress, guilt and anxiety from the equation.
Put simply, a budget is about bringing order to your finances.
So ready to go?
Here’s how you can start putting things in order, no matter how much you earn and no matter what day of the month it may be.
Calculate what you have now
This is the obvious first step. The basic idea is that you can only spend what you have. So take stock of all the money you have now. On Wallet, you can add various cash and bank accounts to your profile. Enter in the current balances in these accounts.
Set up some planned payments
Now that you know what you have, the next step is to think of the fixed expenses you know you will be incurring in the next few days or in the coming month. Think rent, utilities, insurance premiums, loan instalments, transportation costs, membership or subscription fees and so on.
Set up planned payments for these expenses. If you don’t know exactly how much you will be spending on something, Wallet allows you to enter a ballpark figure and mark it as an “inaccurate payment”. This figure will appear on your dashboard and can be changed as soon as you know the exact amount.
Set up budgets
Think of planned payments as one part of a bigger budget. By setting up planned payments, you have just made things easier for you. Depending on the frequency you have set them to, they will now automatically show up in your budgets and records.
So why do you need budgets?
Budgets let you allocate your income to different things you need to spend on. It allows you to monitor your spending patterns, understand your priorities and forecast and helps you be in control of your money.
The key is to only budget for the income you have now. You know how much money you have now, so work with just that.
On Wallet, using the Budgets section, you can create weekly, monthly or yearly budgets and include categories of your choice to each such budget. So maybe, you can try starting with a weekly budget for say two or three most important things.
Let us explain. Say you have $2000 in your account. You could start by creating two budgets, say for household expenses and entertainment. But what you need to keep in mind is that the total of these two budgets should be equal to $2000.
So now say, you set a budget for housing-related expenses and allocate $1500 to it. You can include various categories like rent, utilities, repairs, insurance premiums, shopping for home decor and even groceries in this budget.
This means you are now left with only $500 to allocate for entertainment. Set up a budget, put aside this $500 for it and you can include the categories like restaurants, bars, movie nights, movie nights, hobbies and so on in it.
Now you will start seeing why this method will work no matter what your balance may be or what time of the month you start this exercise. Because, be it $2000 or $100, you are only budgeting for what you have.
Now, just follow your budget
Or in other words, just live your life. The only difference is that now your budget will be your guide when it comes to making spending decisions. So, the next time you decide to spend on something, check whether it has been budgeted for, not whether you have enough bank balance to spend on it.
Say, you want to go for a movie and the ticket costs $20. Your bank balance might show $750, but check your entertainment budget. Can you afford to spend this now? To make this easier, we have introduced color-coded bars that will quickly show you what the state of your budget is at any given point.
Track what comes in and goes out
The next step is to track all expenses and income. As and when you receive new income, enter it in. Log in when you make expenses. If you connect your bank account to Wallet, all of this will just happen like clockwork. Incomes and expenses will get logged in and budgets will get updated in real-time.
Review, adjust and repeat
Now that you have created this system, keep reviewing it and making adjustments when required.
For instance, whenever you get paid, allocate that income to an existing budget item or to a new item, which you hadn’t accounted for earlier as you didn’t have the means to do so then.
Compare your spending patterns and make adjustments in allocations if you feel you have over- or under-budgeted any item.
Why flexibility matters
Each of us have different priorities and there is a limit to which we can foresee and plan things. This is why, we swear by flexibility at BudgetBakers. There is no point in creating a rigid budget and then feeling like you have failed every time you need to make adjustments.
Wallet allows you to set budgets for various heads of expenses and customise them to include categories of your choice. You can also edit this at any point of time to account for unexpected additions or omissions.
Such flexibility makes sure that you are the one in control and does away with negative feelings of guilt and anxiety.
So where does this leave you?
Tracking your expenses and following your budget for a minimum of a month will set things in motion. You can then slowly graduate to building monthly and yearly budgets and even saving up for rainy days.
So budgeting need not have to be time-consuming or overwhelming. You can start any day of the month and with how much ever money you have. Start simple. Accept that you will make mistakes and that changes will have to be made, and stay honest. Soon, you will see how things start falling in place. Your stress levels will decrease drastically and you will be left with more time to spend on things that really matter in your life.
Wallet – system for your financial health
Wallet is available for you worldwide with over 10,000 bank integrations.
It has over 5,000,000 downloads and 400,000 active users.
You can be one of them! Buy a yearly plan with a 50% discount right now!
Find the app on the App Store or Google Play and explore it! Or start by signing up for our WebApp today.