I’ve talked about how I had to google terms like “how to budget” when I began my journey to Financial Independance. I had to Learn how to manage my finances following divorce. There was much uncertainty around money and money was a source of stress now that I was on one income, and was staying in my home. I didn’t really know how much money I had or how much I owed, or what my expenses were, and what I was actually spending my money on. This was a super stressful time and caused anxiety in my life, for sure. 

Overcome Your Budgeting Fears

My financial journey began with some clear goals. It may have seemed crazy, but they were attainable with a plan, like paying off my truck and my home. The mere thought of budgeting initially seemed so overwhelming, yet the actual process was actually kind of fun and exciting, and the more I did it, it became motivating. Building and sticking to a straightforward budget really did help me boost my savings and investments.

By using a budget I was able to transform my financial mindset. It provided a clear timeframe to payoff my truck, then my home. It also kickstarted my investment journey. Importantly, it allowed me to spend money on the things and experiences that are important to me, as well as eventually retire early at the age of 50. 

My beginning budget was truly eye-opening during those challenging financial times. Like many things it can feel a bit overwhelming at first, but that is how we grow. We grow as people the more we get out of our comfort zone and try new things.  Budgeting was a new thing to me at this time. 

Just Write It Down

I began by simply writing things down.  A ruled notebook is how I started. Then I graduated to spreadsheets, and after a while began exploring various budgeting tools.  I had landed on Mint by Intuit. I had used that for years. Now that they have shut down, I’ve been using Empower, as this is where my investments are held as well.

Tracking Expenses

The key for me, and what I think is crucial to people new to budgeting is the habit of expense tracking, a practice that profoundly impacted my financial awareness, clarifying my spending priorities. If there is one thing you take away from this article is to begin to track your expenses. Breaking this down, what I spent this week, then a month, then the last three months. It really helps paint the financial picture of where the money is going.  My biggest revelation, was fast food and dining out. OMG! This was pissing so much money away!

Diving into Budgeting Techniques: Find Your Perfect Fit

There are many different types of budgeting. Let’s look at a couple of the methods that people are successful with.  Again, you may have to try a couple different methods before you find one that works for you. 

Zero-based Budget

With a zero-based budget you assign every dollar you earn a job, or a purpose. An example of this is the “envelope system.”  Imagine you have an envelope dedicated to a spending category, such as rent, food, car repairs, the movies, or that upcoming metal festival. The goal is to make sure your income minus what you spend equals zero The goal is to make sure your income minus what you spend equals zero. This method makes you think carefully about how you use your money, helping you avoid wasting it and making sure you’re spending on things that really matter to you

50/30/20 Budget

The 50/30/20 monthly budget is a simple way to split your take home pay, proportionally, into three buckets. They are as follows: 

50% goes toward your needs such as rent or mortgage, utilities, food, etc.

30% goes towards wants such as streaming services, metal shows, etc.

20% goes towards paying your debts or savings. 

The Anti-Budget

Another strategy that people use is something called an Anti-Budget. Many feel that having a 50/30/20 budget, a Zero-based budget, or other types of budgets feel too restrictive or overwhelming. People sometimes feel this is so limiting, and feel like you are depriving yourself….of everything. So, that is where the Anti-Budget comes in.  Instead of tracking every single expense or assigning every dollar to specific categories, the anti-budget focuses on saving first and then spending the remainder freely.  This focuses on two actions, saving then spending. For example:

First, you save. You decide on a percentage of your income that you want to save or invest. This could be for retirement, an emergency fund, or specific goals like a vacation or a sweet pointy guitar. The key is to prioritize saving by setting aside this portion of your income as soon as you receive it.

Then you spend the rest. Once you’ve set aside your savings, you’re free to spend the remainder of your income on whatever you like, without worrying about detailed tracking or categorizing expenses.

Remove the Noise and Know what You Have

One thing you may consider doing is to consolidate your accounts. Take inventory of all your accounts and where they are. What credit cards, what accounts are at banks or credit unions. And then think about closing unused accounts like credit cards and savings accounts. You are trying paint a picture of everything in one place. Simplifying my accounts made managing my money less stressful. I had recently talked to a buddy that had 7 or 8 credit cards and wasn’t sure of the balances. This would be too stressful for me. That is also a discussion for another time.

Set It and Forget It

If you can, I strongly suggest automate as much as you can.  Setup automatic payments for recurring bills. This saves time and stress of paying bills manually either via the mail, or online. It will also help prevent late fees, that can easily spiral out of control! I’m an advocate for automation.  It makes sense, especially for saving money. For example, setup automate payments for your emergency fund, rent or mortgage payments, and other recurring payments.

Okay, now that we have the groundwork in place, let’s dive into some tricks that can help you be successful when setting up a budget. 

Tricks for an Easy Budget 

Talking with Others Can Help

It may seem awkward at first, but talking to friends about how you manage your money, and how they manage theirs can help.  We all learn from others, and it feels good to find your tribe.  As Jim Rohn said, “You’re the average of the five people you spend the most time with.”  Surround yourself with those people that help and build you up, not knock you down. 

Set Your Goals

It’s proven that we often excel at what we track. Humans also are almost 42% more likely to achieve a goal if they write it down. Mind blown!  When I first started to budget, I wanted to first pay off my truck, then my home.  I set the goal, and tracked the progress towards the goal with a debt tracker. This helped stay focused on where money was going, and keeping forward momentum. 

Determine the Essentials

These are the necessity budget items such as rent or mortgage, utilities, groceries, and cat food. Did I mention I’m a pretty rad cat dad to Malachi The Savannah. He eats. A lot. After the bare essentials are taken care of, I’d allocate money to other categories like eating out, concert tickets, and savings. I’d like to also say, this is totally personal. If you are a fitness enthusiast, maybe your Peloton membership is an essential. 

Housing, Food, Transportation Oh My!

The largest expenses typically come from housing, food and transportation. As I mentioned earlier, fast food, and eating out was my biggie. I saved by bringing a lunch to work more often. By getting a roommate or downsizing to smaller home or apartment you can save here. You may be able to save on transportation living closer to work, if you commute. You may bike in, use public transit or opt for a more fuel friendly vehicle. 

Separate Your Bank Accounts

I know we talked about simplifying and getting rid of accounts earlier, however those are unused accounts that aren’t serving a purpose. I do, however, like separate savings or checking accounts for my fixed expenses and automatic payments. You can think of this as a digital envelope system. I have separate accounts for Home Maintenance, Insurance, and Taxes for example.  I use automation, as we mentioned earlier to transfer money into these designated accounts. It makes things so much easier.  I even had an account as I was saving for my Apple Vision Pro 🙂 

Keep Saving

Saving and Investing was a major part of my journey. Once I was able to pay off my truck, then my home. This is how I was able to continue to save and invest 60%-70% of my income for the future, and for the goal of early retirement.  

Review Recurring Subscriptions

Try and remember all those smaller fees and recurring subscriptions in your budget. Did you sign up for a streaming service to watch that one thing? Did you forget to cancel? I did! Back when Halloween Ends dropped on Peacock. Dude! I gotta get my Michael Myers! All those little expenses add up! I know some people use services like Rocket Money to review and remove unused or unwanted subscriptions

Lastly, I wanted to share some other sites/blogs/podcasts that have helped me. Maybe they’ll help you too! Rock on, and Horns Up, Friends! 

https://inspiredbudget.com

https://marriagekidsandmoney.com

https://www.stackingbenjamins.com

https://affordanything.com

https://www.frugalfriendspodcast.com