How To Start Your Budget
Steps and tricks on how to start budgeting for the first time.
Read time: 3 minutes.
Welcome to the Friday FinTips newsletter, where I provide tips to simplify how you manage money.
I hope you had a great week. Last week I talked about why you need a budget. This week, let’s dive into how to actually start budgeting.
Track where your money goes
Before you start setting your budget amounts, start by tracking your spending for 1-2 months. At this stage, you’re only focused on where your money is going.
The goal here is to capture all your expenses (even those random ones on that random credit card that’s on autopay every month).
TIP: Connect your credit cards and/or bank accounts to Mint to make it even easier to track.
Create categories & subcategories
Now that you’ve tracked everything for the last 1-2 months, you want to categorize things as either “Need”, “Want”, or “Savings”. Your categories are summary buckets - not specific expense lines (that'll be a subcategory). The goal is to only have 2-3 categories.
Then, come up with subcategories. Start with things like Rent, Groceries, Utilities, and Entertainment. The Friday FinTips budgets have pre-filled subcategories for each category. The goal here is to get all expenses into a bucket.
TIP: Sometimes you just aren’t sure where something fits. That’s fine! Create a miscellaneous subcategory and put it there. We can all use a little wiggle room.
Update it weekly
Consistency is key here! Set aside 10-15 minutes each week to take stock of your spending. I do it every Friday, but pick a day that works best for you.
In the beginning, it may take you a little longer and that’s fine. Keep going! Once you get used to the process, you'll get quicker at it. The goal here is to get weekly snapshots so you can tweak things as needed (rather than having to figure it all out at the end of the month).
TIP: Choose the same day/time each week and put a reminder in your phone!
Figure out where you are in the budgeting process. If you're brand new, start by tracking your expenses for a couple months. If you've been doing it for a while, try coming up with a consistent schedule. Repetition will produce the results you want. Keep it up, you got this!
Enjoy your weekend. See you next Friday!