how to budget and actually save money
Are you ready to take control of your finances but don’t know where to start? Budgeting doesn’t have to be intimidating or overwhelming. With the right tools and mindset, you can build a system that works for you. Here’s how to budget and actually save money. You’ll be surprised by how simple it actually is.
Choose Your Tool of Choice
The first step in your budgeting journey is to decide how you want to track your money. Whether you’re a fan of spreadsheets, apps, or good old-fashioned pen and paper, the key is to find what works best for you. I love the templates in coplenty, and after a lot of trial and error, I also love personally creating my own in Google Spreadsheets.
Why Manual Tracking Matters
While it can automate a lot of the work, there’s real value in manually inputting every transaction. Here’s why:
Accountability: Manually entering transactions helps you stay mindful of your spending habits.
Awareness: You’ll become more conscious of where your money is going.
Reflection: Inputting expenses forces you to think about whether each purchase is necessary.
Just Start
The best way to begin is simply to start. Start tracking your expenses today, even if it’s not perfect. Track your spending for 1-3 months to establish a baseline. Having multiple months to compare will help you better understand your spending patterns.
Identify Areas to Cut Back
Once you have a clear picture of your spending, you’ll likely notice areas where you can cut back. But remember, it’s not sustainable to go cold turkey and cut off all discretionary spending. Take small, manageable steps to avoid burnout and setbacks.
Determine Your Money Values
Budgeting isn’t just about cutting back—it’s about spending intentionally. Ask yourself:
What are the things I value enough to spend money on?
Where can I afford to be more frugal?
Knowing your financial priorities will help you stay disciplined and motivated.
Set Financial Goals
Your budget should align with your financial goals. Ask yourself:
What am I saving for? (Car, house, vacation, education, etc.)
Why is this goal important to me?
Every financial decision should bring you closer to your goals. Before making a purchase, ask yourself: “Is this a want or a need?”
Build Daily Budgeting Habits
Tracking your expenses daily can take as little as 2-5 minutes but makes a huge difference. Introduce a spreadsheet where you:
Log your income.
Categorize expenses.
Monitor progress toward your goals.
Master Bank Account Management
Simplify your financial life by setting up multiple bank accounts:
Bills Account: On payday, transfer half of your monthly bills into this account. By separating this money, you won’t accidentally spend it.
Savings Account: Build your emergency fund and allocate for other savings goals.
Spending Account: Use this account for discretionary spending. Consider using a cashback credit card for additional benefits.
Save Before You Spend
Budget for your savings first, then allocate what remains for spending. This ensures you’re prioritizing your goals over impulse buys.
Budget for Quarterly Bills
For quarterly expenses, review past bills to calculate the average amount. Set aside money monthly to cover these costs seamlessly.
Create a Payday Routine
Every payday, follow this routine:
Input your income.
Transfer half of your monthly bills into your bills account.
Contribute to your savings.
Allocate funds for discretionary spending.
Treat yourself occasionally to stay motivated!
Final Tips
Spend less than you make.
Stop spending above your means.
Track your money consistently, and you’ll be amazed at the results.